More Fantastic Reasons To Support a Basic Income in Canada

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Part one of this series outlined the state of food security in Canada, explained that most Canadians are food insecure because they do not have enough money for food, and concluded with an idea: basic income programs, which guarantee a certain income to all adult residents of a specific territory, could be an effective policy tool to reduce poverty and so promote food security.

Part two of this series considered a range of practical and philosophical objections to basic income schemes, but as I further explained, no concern is insurmountable. In fact we–Canadians–have tried this before, more or less, and it worked!

I want to repeat that point, because I can: we implemented a kind of basic income in Canada, with positive recorded outcomes.

The MINCOME experiment in Manitoba

From 1974 to 1978, through the “MINCOME” project, the poorest residents of Dauphin Manitoba received monthly cheques whether or not they were working, or disabled, or whatever. The value of the cheques varied according to family income, and brought each family up to a living wage income. The payments were not universal, but like a basic income, they did establish a no-questions-asked income floor. Sadly, when a new government was elected in 1979 the project was scrapped without any analysis or final report.

However, the University of Manitoba professor Evelyn Forget revisited the project documents in the mid 2000s, and wrote a research paper titled “The Town With No Poverty: Using Health Administration Data to Revisit Outcomes of a Canadian Guaranteed Annual Income Field Experiment.” Among other conclusions, Forget found that

overall hospitalizations, and specifically hospitalizations for accidents and injuries and mental health diagnoses, declined for MINCOME subjects relative to the comparison group. Physician contacts for mental health diagnoses fell for subjects relative to comparators. Overall, the measured impact was larger than one might have expected since only about a third of families qualified for support at any one time and many of the supplements would have been quite small.

Forget additionally concluded that “these results would seem to suggest that a Guaranteed Annual Income, implemented broadly in society, may improve health and social outcomes at the community level.” Although she qualifies her conclusions, as a good academic ought to, Forget’s results are significant.

Basic income saves us all money? 

The results of her study are especially significant given what we do know about our current social assistance programs–how they work, or don’t. Don Drummond, the former Chief Economist of TD Bank, has described Canada’s welfare system as

a box with a tight lid. Those in need must essentially first become destitute before they qualify for temporary assistance. But the record shows once you become destitute you tend to stay in that state. You have no means to absorb setbacks in income or unexpected costs. You can’t afford to move to where jobs might be or upgrade your skills.

Drummond’s comments refer specifically to the consequences for individual recipients of social assistance, which I do not want to trivialize. I have never tried to survive on social assistance. The daily grinding poverty that Linda Tirado describes is foreign to me.

Implicit in Drummond’s comments is the point I’ve already made here, and elsewhere: poverty is expensive, and so are our social assistance programs. We all must pay, every time those programs fail to provide real opportunities to the people they purportedly serve.

Canadian seniors have a guaranteed income

So we had the Dauphin “experiment,” which was a relatively small and successful demonstration of the positive effects of a basic income. We should not forget that our Federal Government every day administers another kind of guaranteed income scheme, which most every Canadian who turns 65 benefits from: Old Age Security (OAS). According to Statistics Canada, “your employment history is not a factor in determining eligibility: you can receive the OAS pension even if you have never worked or are still working.” If you are quite rich, you do not get OAS. If you have no other income, you receive a top-up, called the Guaranteed Income Supplement.

So here is more good evidence that guaranteed incomes make people healthier. In her research about food security, the Nutritional Sciences professor Valerie Tarasuk highlights an important connection between a guaranteed income and food security. Her point is simple: Canadians over 65 are the only group in this country to have a guaranteed annual income indexed to inflation, and a basic ‘suite’ of in-kind benefits, like drug coverage, transit subsidies, and various kinds of ‘senior days’ at private businesses. With that in mind, consider the following graph, from Tarasuk:

 

image5

Of all the groups of Canadians receiving financial assistance from the Canadian government, seniors (65 years and older) are the most food secure. They are the only group whose income, meagre as it may be, rises with inflation; and they have the most comprehensive benefits package. (And still there are over 600,000 Canadians 65 or older living in poverty.)

Guaranteed incomes promote health and ensure wealth

In their paper “How a Guaranteed Annual Income Could Put Food Banks out of Business,” researchers from the University of Calgary enlarge upon this point. They start with the remarkable fact that “Canada can boast of having one of the lowest rates for poverty among seniors in the world, largely due to its guaranteed income programs for those 65 years and older.” What’s more, “when low-income Canadians turn 65 years old and leave behind low-paying, often unstable jobs, their poverty levels drop substantially.” They explain how seniors enjoy a unique protection from budget shocks, and how this “disaster insurance” translates into better health: “Self-reported rates of physical and mental health improve markedly as well after low-income Canadians move from low-wage, insecure employment to a guaranteed income at the age of 65.” So while it is true that Canadians in general are among some of the most well-off in the world, it is also true that many Canadians get healthier and wealthier when they turn 65. In other words, we can still do better, and especially for non-seniors living on a low income.

The Calgary researchers’s solution is also fairly simple, and probably not surprising: expand the basic income program that already positively serves so many Canadians, to the rest.

We cannot end poverty, we are told, for so many reasons. It’s complicated, it’s inevitable, it’s not our problem. And yet, a basic income scheme could address the root cause of poverty–not enough money–and free up funds to address what remains.

“Faaantastic!”

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