Basic income could work—if you do it Canada-style
Basic income could work—if you do it Canada-style
A Canadian province is giving people money with no
strings attached—revealing both the appeal and the limitations of the idea.
by Brian Bergstein
June 20, 2018
Fresh produce
Dana Bowman, 56, expresses gratitude for fresh produce at
least 10 times in the hour and a half we’re having coffee on a frigid spring
day in Lindsay, Ontario. Over the many years she scraped by on government
disability payments, she tended to stick to frozen vegetables. She’d also save
by visiting a food bank or buying marked-down items near or past their sell-by
date.
But since December, Bowman has felt secure enough to buy
fresh fruit and vegetables. She’s freer, she says, to “do what nanas do” for
her grandchildren, like having all four of them over for turkey on Easter. Now
that she can afford the transportation, she might start taking classes in
social work in a nearby city. She feels happier and healthier—and, she says, so
do many other people in her subsidized apartment building and around town. “I’m
seeing people smiling and seeing people friendlier, saying hi more,” she says.
Jim Garbutt sees moods brightening, too, at A Buy &
Sell Shop, a store he and his wife run on Lindsay’s main street. Sales are
brisker for most of what they sell: used furniture, kitchen items, novelties. A
Buy & Sell Shop is the kind of place where people come in just to
chat—“we’re like Cheers, without the alcohol,” Garbutt says—and more and more
people seem hopeful. “Spirits are up,” he says.
What changed? Lindsay, a compact rectangle amid the lakes
northeast of Toronto, is at the heart of one of the world’s biggest tests of a
guaranteed basic income. In a three-year pilot funded by the provincial
government, about 4,000 people in Ontario are getting monthly stipends to boost
them to at least 75 percent of the poverty line. That translates to a minimum
annual income of $17,000 in Canadian dollars (about $13,000 US) for single
people, $24,000 for married couples. Lindsay has about half the people in the
pilot—some 10 percent of the town’s population.
The trial is expected to cost $50 million a year in
Canadian dollars; expanding it to all of Canada would cost an estimated $43
billion annually. But Hugh Segal, the conservative former senator who designed
the test, thinks it could save the government money in the long run. He expects
it to streamline the benefits system, remove rules that discourage people from
working, and reduce crime, bad health, and other costly problems that stem from
poverty. Such improvements occurred during a basic-income test in Manitoba in
the 1970s.
People far beyond Canada will be watching closely, too,
because a basic income has become Silicon Valley’s favorite answer to the
question of how society should deal with the massive automation of jobs. Tech
investors such as Facebook cofounder Chris Hughes and Sam Altman, president of
the startup incubator Y Combinator, are funding pilot projects to examine what
people do when they get money with no strings attached. Hughes’s Economic
Security Project will pay for 100 people in Stockton, California, to get $500 a
month for 18 months. Y Combinator ran a small-scale test in Oakland,
California, last year; beginning in 2019 it will give $1,000 a month to 1,000
people over three to five years, in locations still to be determined.
This momentum figures to keep building as AI and robotics
make even more inroads. Legislators in Hawaii are beginning to study the
prospects for a basic income. The lawmaker who has led the effort, Democrat
Chris Lee, worries that self-driving cars and automated retail checkout could
be the beginning of the end for a lot of human labor in Hawaii’s service-based
economy. If machines can handle tasks in tourism and hospitality, Lee says,
“there is no fallback industry for jobs to be created in.”
But there’s an important difference between that vision
for a basic income and the experiment in Ontario. The Canadians are testing it
as an efficient antipoverty mechanism, a way to give a relatively small segment
of the population more flexibility to find work and to strengthen other strands
of the safety net. That’s not what Silicon Valley seems to imagine, which is a
universal basic income that placates broad swaths of the population. The most
obvious problem with that idea? Math. Many economists concluded long ago that
it would be too expensive, especially when compared with the cost of programs
to create new jobs and train people for them. That’s why the idea didn’t take
off after tests in the 1960s and ’70s. It’s largely why Finland recently
abandoned a basic-income plan after a small test.
If any place can illuminate both the advantages of basic
income and the problems it can’t solve, it will be Lindsay. The town is
prosperous by some measures, with a median household income of $55,000 and a
historic downtown district where new condos and a craft brewery are on the way.
But that masks how tough it is for a lot of people to get by. Manufacturing in
the surrounding area, known as the Kawartha Lakes, has declined since the
1980s. Many people juggle multiple jobs, including seasonal work tied to
tourism in the summer and fall. Technology is part of the story too: robots
milk cows now.
Basic income as a
social equalizer
The Olde Gaol Museum is indeed an old jail, but it’s also
a showcase for things that reveal the texture of Lindsay’s history—uniforms
that nurses from town wore in France during World War I; tools and maps used by
railway workers when this was a hub for eight railroad lines; 19th-century
paintings by a local artist who depicted the timeless regional pastimes of
canoeing and fishing. When curatorial assistant Ian McKechnie gives me a tour,
he stops and plays a lovely tune on a foot-pumped organ called a harmonium that
was made in Ontario more than a hundred years ago.
McKechnie, 27, has worked at the museum for seven years
and is devoted to it. Unlike his previous job, when he was briefly a laborer at
a goat cheese factory, it offers a chance to be creative and connect with many
people in the community. He doesn’t just give tours: he researches and
organizes exhibits and writes supporting materials. But on the day we meet, the
museum is not paying him to be at work, and therein lies a story about why he
and the Olde Gaol’s operations supervisor, Lisa Hart, both signed up for the
basic income.
The Olde Gaol Museum keeps going thanks to the help its
staff gets from the basic-income project.
The museum gets almost all its revenue from grants, and
one just expired. The manager of the museum recently left, and so it falls
largely to McKechnie and Hart to keep things going until another grant comes
in. Even when it does, these won’t be lucrative jobs—perhaps $20,000 a year for
McKechnie’s. They could find positions in the area that pay more, but both
would much rather continue their labor of love at the museum. Leaving now might
undercut its momentum toward a more sustainable future, which could include a
new cultural center that would connect the museum with a local art gallery.
Thanks to the basic-income trial, both can afford to stay
on with the museum. And in the meantime, Hart says, she will no longer put off
buying new eyeglasses. The basic income “allows you to spend time on something
that’s valuable,” she says. “It’s very sad to walk away from something where
you’re valued and doing something meaningful for the community because it just
can’t pay you a lot.”
This highlights an intriguing aspect of basic income: it
functions in different ways for different people. The way Hart describes it,
it’s fuel for cultural development. For Dana Bowman, who might now take classes
in social work and regularly volunteers at a community garden, it’s a food
subsidy, an educational grant, and a neighborhood improvement fund all in one.
For a married couple who own a health-food restaurant that barely covers its
costs, it’s a small-business booster. A man who hurt his back working in a
warehouse told me he hoped it could augment his employer’s disability payments.
A student who was about to graduate from a technical college and had a job
lined up said he planned to use the extra income to pay down school loans and
start saving for a house.
For McKechnie, the basic income is something broader: a
social equalizer, a recognition that people who make little or no money are
often doing things that are socially valuable. “It gives one the assurance that
the work you’re doing is not in vain, even though you’re not working in a bank
or doing other things that are considered part of a career,” he says.
Part of a safety
net
A basic income has allowed Bowman to add fresh vegetables
to her diet.
Even if a basic income turns out to be a flexible and efficient
government program, it’s not clear that it would be a great way to respond to
technological unemployment. Over and over again, people in Lindsay told me it
won’t reduce people’s demand for jobs.
As a practical matter, the Ontario trial doesn’t pay
enough to eliminate most people’s need to work or to rely on family for
support. But even if a richer payout were feasible, that wouldn’t change the
philosophy of the program. Basic-income supporters want to improve the odds
that people will take better care of themselves and their families. They want a
humane and dignifying way of helping people who simply can’t work. But they
also argue that most people generally want and expect to work. “It’s not
supposed to be welfare for people displaced by technology,” says one of the
basic-income advocates, Mike Perry, who runs a medical practice in Kawartha
Lakes.
Visits to the community gardens have become part of
Bowman’s routine.
Moreover, while giving poor people money helps them, it
still leaves urgent and difficult questions unanswered about the impacts of
automation and globalization. What will it take to ensure that entire regions
aren’t left far behind economically? What can be done to boost the supply of
good, steady jobs? Basic income “is only the beginning,” says Roderick Benns,
former vice chair of the Ontario Basic Income Network. “It’s not just ‘cut a
check and get on with building the corporatocracy.’ We have to ask what else we
are doing as a society to get people to reimagine what they can do with their
lives.”
Benns, the author of several books, grew up in Lindsay.
Until recently, he and his wife, Joli Scheidler-Benns, lived three hours away,
but the pilot is so important to them that they moved back so he can chronicle
it in a new publication called the Lindsay Advocate and she can do research for
her PhD on the subject at York University. After Benns describes how basic
income should augment job training and other social programs, Scheidler-Benns,
who is originally from Michigan, nods and then adds: “I don’t see how it could
work in the US.”
After all, she says, Canada does many other things to
strengthen its safety net and reduce inequality. For one, it has universal
health care. School funding in Ontario is primarily allocated at the province
level rather than being heavily dependent on local property taxes, as it is in
the US. Canada also traditionally spends about 1 percent of its GDP on
workforce-development programs, according to the Organization for Economic
Cooperation and Development. That’s about half of the proportion in other
advanced countries, but it still dwarfs the US figure, which is about 0.3
percent.
Funding a
different mind-set
Tony Tilly is the outgoing president of Fleming College,
which specializes in preparing people in Kawartha Lakes for careers in both
white-collar work and trades. About half the students don’t come right from
high school; they’ve already been in the workforce and hope to learn a new
skill.
He supports a basic income because he thinks it could
help people break out of poverty that has beset their families for generations.
But even if the program continues past the three-year trial period, Fleming’s
essential challenge would remain: how to prepare students for a world in which
more and more tasks are being automated.
Fleming is still priming its graduates to work in
traditional strongholds of the regional economy: jobs tied to the environment
and natural resources, infrastructure development, mining, construction, and
government. But the school is trying to instill a different mind-set from the
one students had when Tilly became its president 14 years ago. They now get
more emphasis on so-called soft skills: teamwork, problem-solving, personal
interaction. Above all, he says, they need to know “not only how to do some
particular job but how to contribute overall to the success of an organization,
whether it’s a manufacturer or a provider of social services.”
If the basic-income plan works as expected, Fleming might
get even more students than it otherwise would. Dana Bowman could be one of
them.
It’s been years since she last had a paying job, as a
receptionist. She has been on disability for a variety of ailments, including
skin cancer and arthritis. But she feels she is up to doing some part-time
work. In 2015, two years before the basic-income trial, Bowman asked a case
worker if she could get help paying for transportation to a Fleming campus that
offers classes in social work. The official said that would lead to cuts in
other benefits Bowman relied on. The message Bowman says she got was: “You’re
unemployable. You’re not worth investing in.”
In contrast, the basic-income plan ensures a minimum for
her without micromanaging how she spends it. For every dollar that recipients
earn above the minimum, their payout from the province will be cut by 50 cents,
but no one is made worse off by working.
Even being able to consider that prospect, Bowman says,
has been good for her. “I don’t feel ‘less than.’ I feel ‘equal to.’ Not
feeling guilty walking down the street, thinking, ‘I didn’t do enough today,’”
she says. “People want to do something. People aren’t inclined to do nothing.”
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