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Thousands of Canadians Are Giving Universal Basic Income a Shot

Thousands of Canadians Are Giving Universal Basic Income a Shot

Neil Parmar

via iStock

via iStock

The province of Ontario boasts an economy that’s among the strongest in Canada, but not everyone who lives there sees that economic benefit in their everyday lives. “People are struggling to keep up with the rising cost of living and facing ‘precarious employment’ with little job security or benefits,” the province’s Ministry of Community and Social Services recently warned

That’s why officials recently launched a three-year pilot involving 4,000 residents in a handful of cities to study whether a “basic income”—essentially, giving people enough money to live on with no strings attached—might “better support vulnerable workers and give people the security and opportunity they need to achieve their potential.” To qualify for benefits, individuals must have low annual incomes—less than 34,000 Canadian dollars (US$27,900) for individuals—and have lived in one of the pilot cities for at least a year. The government will provide roughly 17,000 Canadian dollars (US$13,900) per individual. (There is some fine print, such as reducing that guaranteed amount by half of any income earned.)

At a time of growing economic inequality in North America, governments, nonprofits, and even a business incubator in Silicon Valley are studying or launching basic income tests of their own to see how such cash transfers might impact food security, stress and anxiety, health care usage, and labor-market participation. “Clearly there are challenges,” that grow alongside such inequality, says Ambaye Kidane, former director of the economic policy branch at Ontario Ministry of Finance. “People are looking for solutions.”

Certain countries already offer what some might call a basic income solution: For seniors there are social security benefits, while families with children sometimes receive a helping hand through tax credits. “So where is the big gap? The working poor,” says Kidane. The pilot in Ontario, which began in June, will include low-income participants who live urban, rural, and mixed centers. The government also says in the future it plans to work with First Nations communities to see how a basic income might affect those individuals.

 

The pilot project’s design is similar to a basic income experiment known as Mincome, which was conducted in the Canadian province of Manitoba in the 1970s, until it was halted in 1979 by the Conservative government. “There was a fear then, and there’s a fear now, that if you give people a basic income they’ll work less rather than more,” says Evelyn L. Forget, an economist and University of Manitoba professor who has studied Mincome. Some analyses from that test showed there was no significant change in how much adults worked overall, though Forget says young men comprised the biggest group of those choosing not to work. That’s because some male youth attended and completed high school instead of working—an opportunity that otherwise couldn’t have been afforded by families. Hospital visits also fell dramatically, Forget notes, and fewer people complained to doctors of depression and anxiety.

Recently some Silicon Valley execs have expressed interest in these types of income experiments. Facebook founder and CEO Mark Zuckerberg has praised the concept of basic income but has also noted the current lack of bipartisan support around the idea and general difficulty implementing a social program that requires a tax hike. He cites Alaska’s Permanent Fund, which has shared dividends from oil industry revenues with each of its residents, as a good lesson for the rest of the U.S. “Rather than having the government spend that money, it is returned to Alaskan residents through a yearly dividend that is normally $1,000 or more per person,” he wrote in a Facebook post in July, before recent concerns that the oil and money is drying up.

Separately, Sam Altman, president of the startup incubator Y Combinator, wrote a blog post last year about how he believes “it’s impossible to truly have equality of opportunity without some version of guaranteed income.” He followed up that post by announcing a short-term, basic income pilot. The pilot is taking place in Oakland, a city with “both concentrated wealth and considerable inequality,” Altman wrote. “In our pilot, the income will be unconditional. … We hope basic income promotes freedom, and we want to see how people experience that freedom.”

Y Combinator did not respond to Make Change’s requests for comment, though GiveDirectly, a nonprofit behind the recently launched basic income experiment in Kenya, says it has met with the incubator. “My understanding is that it’s a very, very small pilot to test the pipes with a handful of people. Then, if rolled out, it would be a few thousand people through three to five years,” says Joe Huston, chief financial officer of GiveDirectly. Families in Oakland will reportedly receive up to $2,000 each month and can do whatever they want with it. “People will be able to volunteer, work, not work, move to another country—anything,” Altman wrote.

Not everyone sees Silicon Valley’s interest in basic income as well intentioned, however. Forget says, “The guys at Y Combinator are very focused on technological change and the worry that human jobs are disappearing”—jobs that the tech industry, facilitated by backers like Y Combinator, often makes obsolete. Instead of a utopian ideal, basic income projects may just be a way to shift the social costs of disruption away from the companies responsible for it.

And who pays for universal basic income, anyway? Many voters like the concept of a basic income, says Kidane, but “if you ask if people are going to pay it, the number may go down.” Last year, Switzerland soundly rejected the notion when it was put on a ballot, with some politicians worrying the proposed $2,255 monthly stipend would cause a massive wave of immigration into the small European nation. “The fundamental issue is: Is society willing to do it—to provide basic income?” says Kidane. “The willingness to do it has to be accompanied by some in society [willing] to pay higher taxes.”

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