Basic Income thoughts on a Saturday Morning

I recently gave an e-mail interview about a Basic Income. I thought my answers were pretty good, so I decided to share. Here goes.

TL;DR version: If the problem a Basic Income is trying to solve is that incomes don’t cover expenses, we should recognize that there are other, more inclusive and more affordable, solutions, which involve addressing the root causes of low incomes and addressing the root causes of high expenses, since it’s true that “the rent is too damn high”.

On why a Basic Income isn’t actually a basic income…

Basic income programs do not ensure people have a set income each month that allows them to cover the basics (rent, food, bills). Here’s why:

First, we already have a number of unconditional cash transfer programs to help offset the cost of living. GST credits, Trillium Benefit, that sort of thing. They are helpful for many things, and there is room to make them more generous.

But they do not ensure people can cover the basics, and never well. Despite the existence of these programs, the percentage of homeless people who collect them are… roughly three percent. Just 3 out of 100. As Professor Lindsay Tedds’ has pointed out, take-up for other groups is quite low as well, often under 50 percent. Combing these programs, making them more generous and calling it a “basic income” doesn’t change any of this. There are structural barriers, financial literacy barriers, mental and cognitive barriers that prevent people from accessing this money.

Second, in our cities, there’s a fairly limited amount of housing, for a variety of reasons (lack of land, 40+ years of government underinvestment in social housing, red tape that makes building infill housing difficult). A Basic Income isn’t going to get more housing built in our cities — it will just have more dollars chasing (roughly) the same number of places to live, giving landlords increasing power to raise rents. So governments increase cash transfer to low-income households, rents go up, governments are forced to make those transfers even more generous, rents go up again — it’s a hamster wheel, where low-income families can never get ahead, and the only group that benefits is landowners.

Third, there’s also the problem of how to pay for these programs. This is where things get very problematic, as these programs are often financed by eliminating or reducing beneficial government programs. A few examples:

• The Ontario Basic income pilot required persons with disabilities (PWDs) that were receiving a number of supports for assistive devices, guide dog expenses, etc. to give up those supports to collect a basic income. This was a bad trade-off for many PWDs, so having a basic income rather than needs-based supports can harm many, so many PWDs rejected the program. Fortunately, being a pilot, they were able to do so, but if the change were ever made permanent, many of our most vulnerable would be irreparably harmed. Ontarians saw this first hand with the Doug Ford Ontario Autism Program, which eliminated needs-based programs and replaced them with a quasi-Basic Income for families with children on the spectrum.
• Of course, the Ontario Basic Income pilot was just a pilot, so a real-world implementation could be different, though many (though not all) Canadian Basic Income plans involve financing a Basic Income, in part, through removing badly needed supports for persons with disabilities. The PBO report is one such example, but there are many more.
• Finally, we can look at real-world programs. The Alaska Permanent Fund is often cited by Basic Income advocates as a real-world example of the benefits of a Basic Income. A recent Vox piece illustrates recent cuts that took place, including a $130 million cut to Medicaid, in order to raise the size of the cheques.

In short, free markets are wonderful things, but we shouldn’t expect that we can just distribute some cash and then have them take care of the rest and poverty will be eliminated. There’s simply too many structural barriers that exist in our economy, and we can’t simply wish those away.

And, intuitively, Canadians know this. We don’t give every family some money and tell them to go acquire health care; we have a public health care system. We don’t give families with kids some money and tell them to spend it educating their kids; we have a terrific system of public education (though some Basic Income supporters, particularly in the U.S. are also supporters of education vouchers, so support for our current ways of doing things in education is not universal). We have a military rather than simply giving people cash so they can arm themselves.

Ultimately, that’s what this debate should be about. There’s a line we draw between what we believe governments should provide, and what we believe people should acquire by themselves (and how much funding they should receive from the government to help them do that). The debate is where to draw that line: Would we be better off having a school lunch program, or should we just give families more money so they can buy their own lunches? Would we be better off giving families more money so they can afford high pharmaceutical prices, or would we be better off with pharmacare? Those are tough cases, and there’s reasonable arguments that can be made on both sides.

Overall, though, the types of Basic Income proposals out there, draws that procurement line way too far on the “have households buy everything” side than is reasonable.

What’s the alternative?

So what are better solutions?

Let’s go back to the problem we’re trying to solve: ensuring that incomes are large enough to cover the basics (rent/food/bills). Under this framing, we either need incomes to go up, relative to costs, or we need costs to go down, relative to incomes.

There are benefits to increasing incomes through making direct government transfers more generous, but they’re not the only way, and they don’t address the underlying issues — why are incomes low in the first place? There’s all kinds of structural barriers, from a lack of child-care, to weak labour rights, to a lack of transit to get people from where they live to where they work, to inadequate mental health supports, to institutional racism, that prevent Canadians from fully participating in our society and keeps their incomes low. We need to apply an intersectional lens to all of these problems and work on addressing those barriers, if we’re going to create a society where everyone can fully participate.

Now, let’s consider the cost side of the equation. Simply put, we need to focus on lowering the costs of what people buy, but also reduce the need to purchase as much. As economist Armine Yalnizyan has put it, we need to decommodify the basics.

By far the biggest expense that low-income households have is housing, so that’s the obvious place to start.

We need to start looking at housing as not a price problem, but a quantity problem. High prices are the result of a lack of housing, and unless we address the underlying causes of that lack of quantity, we’re never going to be able to fix those problems. Some of that is government doing more (big increases in social housing), some of that is government doing less (reducing the barriers that prevent infill housing from being built). And we also need policies to ensure the housing that is built is actually used for housing, and those properties are not just sitting empty.

Next biggest line-item for many low-income households is transportation. Our cities need green, affordable, high-quality public transit to get them to where they need to go. Are we better off as a society giving everyone enough money to purchase their own car, or are we better off creating cities where we don’t need to drive everywhere in a car?

Armine framed the contrast better than I could; here’s how she describes it:

How much money could we be talking about? Across Canada, a universal basic income of $10,000 a year would cost $350 billion (17.5% of GDP) minus any reduction or elimination of existing income transfers. A more modest and targeted goal of raising everyone’s income above the poverty line would cost an estimated $30 billion per year over and above existing programs. Paying for this basic income program would require taxpayers to chip in the equivalent of about four percentage points more in sales taxes across Canada. The majority of Canadians would pay but see no benefit, as they are not poor. Even if a consensus developed around this kind of policy fix, how long would it hold?

Contrast this with another possibility: the CCPA Alternative Federal Budget shows that for half the annual cost of a poverty-eliminating basic income ($15 billion) we could permanently expand the stock of affordable housing, child care and public transit, as well as almost eliminate user costs for pharmacare, dental care and post-secondary schooling. After a decade, we would have greater access to more high quality, affordable necessities of life — not just for the poor, but for everyone.

Spend a little more and you could offer free access to community and recreation centre programming, expanded mental health services, universal access to low-cost internet and more legal aid. The net result: more participation, more mobility, more potential, more healthy people, more justice. Add to that list less political friction and disenfranchisement, and more solidarity.

A Canada with more participation, more mobility, more potential, more healthy people, more justice? Sign me up!