Tuesday, June 07, 2016

World Of Wonders!

Over the weekend, the Swiss held a referendum in which they rejected a proposal for a guaranteed annual income. Andrew Coyne writes:

The model on which the Swiss voted was at the outer limits of what anyone has imagined a basic income could or should entail. At 2,500 Swiss francs a month (about $40,000 a year) for every man, woman and child in the country, the gross cost of such a program in Canada would come to about $1.4 trillion, or more than two-thirds of our gross domestic product. Even netting out the money not spent on the programs it replaced, the Swiss plan was reckoned to cost a quarter of GDP in additional taxes. No wonder voters rejected it. 

But that doesn't mean a guaranteed annual income is a bad idea. And, interestingly, Coyne rejects the traditional conservative argument that a GAI would increase the likelihood of "moral hazard" by encouraging people to do nothing:

One of the oddest objections to the basic income idea, in this light, is that it might reduce work incentives. Whatever minimal inducement to idleness there may be in, say, a $10,000 annual income guarantee, it is trivial compared to the benefits of cutting implicit tax rates to 20 or 25 per cent. Neither is a basic income needed as a substitute for wage labour, as some advocates contend: robots are no more likely to make humans obsolete in the 21st century than threshing machines did in the 18th.

Coyne does make the traditional conservative argument that a guaranteed annual income would streamline the cornucopia of government programs:

OK, so maybe a one-size-fits-all basic income guarantee is out of reach, at least at one go. It’s still possible to move in that direction, one piece at a time. Indeed, we already have what amount to basic income guarantees for children in the new Canada Child Benefit (combining the old Universal Child Care Benefit, the Canada Child Tax Benefit and the National Child Benefit Supplement) and the elderly, via Old Age Security and the Guaranteed Income Supplement. The federal Working Income Tax Benefit is a basic income for the working-age population, in embryonic form.

Could the WITB be merged with OAS/GIS, the basic personal exemption, other federal and provincial tax credits, and provincial social assistance programs to create a universal adult income guarantee? In principle, certainly. Would it be worth some additional cost? Again, yes: ensuring no one goes without, while restoring work incentives and granting greater choice in public services, would seem one of the best uses of public funds imaginable.

It's intriguing to see conservatives like Coyne and Hugh Segal argue for a guaranteed annual income. World of Wonders!

Image: commondream.org


Kirby Evans said...

If you look at the history of Swiss referenda you will see that they are actually little more than a vehicle for the government to maintain the status quo. This is, of course, a consistent problem with referenda in general, and with Swiss referenda in particular. When asked in the context of a referendum people generally opt of the status quo. In Switzerland it is harder than people think to create a national referendum unless the government favours it. But people's sponsored referenda which are opposed by the establishment almost never pass. It seems that people are generally nervous about change so all they need is a government or party to say some significant change is a bad idea or "dangerous" etc, and they will opt for no change. The Cons in Canada know this and that is why they are pushing so hard for a referendum on electoral change. That old adage that says that the "people are never wrong" is, well. . . wrong. When it comes to progressive change, the people are often wrong and need to be dragged into the future by mavericks and courts who know that the time has come for change.

Owen Gray said...

It's not enough to ask the question, Kirby. You have to build support -- and that takes time and patience.

Anonymous said...

The idea seems too good to believe, especially when Conservatives are stumping as advocates. However, its not too hard to imagine what it is that turns their crank about it; all government reduced to a weekly check, so shuttup!

Owen Gray said...

I admit that there's some of that behind it, Anon. Conservatives like simple answers. But, it seems to me, a basic income is a sound idea.

Anonymous said...

I agree.

David E said...

Surely we would not be giving $40,000.00 to every man, woman, child and newborn in the country. Also for a family would we give $40,000.00 to both husband and wife? What about all the people who already earn over $40,000.00 per year?

I think the calculations are off a little bit.

Anonymous said...

Neoliberals like Coyne and Segal hate everything government which is why they support the GI.

They also believed that Unemployment Insurance benefits were too high and had to be cut because they said they were a disincentive to work. Then the Neo-Liberal party turned unemployment insurance into a tax on poor workers and used a $40-billion UI surplus to pay down government debt.

I think the key to making a GI work is to have different tiers. Say there's a welfare equivalent tier, which is low enough to provide an incentive to find work. If a person is stuck on the welfare tier for 5 years they are automatically upgraded to the disability tier. (This would signify they are unemployable.)

There could also be different tiers for temporary unemployed, single mothers and retirees.

The most important thing is having the GI indexed to inflation so there are no stealth cuts. (The Ontario Neo-Liberals have been cutting welfare and disability benefits through inflation erosion. Both benefits are significantly lower than what they were when the Harris Cons were in power.)

The GI is certain to become a reality as machines put more and more people out of work. One part of it to work towards in the present is universal public benefits that include basic prescription, eye-care and dental. Perhaps government social workers should be tasked with helping people find work rather than working to exclude people from receiving benefits which is their present job description in Ontario (like US healthcare insurance company workers.)

Owen Gray said...

Interesting suggestions, Anon. Given regional differences, it would be hard to design a GI with one size for all. And, just as the old Baby Bonus greased the wheels of the economy, a guaranteed income would do the same.

Owen Gray said...

As Coyne writes, David, the Swiss proposal was a bit rich. And as Anonymous suggests -- and Coyne too -- we do not need to have a program where one size fits all. We should allow some flexibility.