The growing movement for a basic income
November 22, 2015
It’s early evening on the first of July. A scraggly group sits in an east end Toronto living room, calling to allies with a hand-scrawled sign taped to the front door. “Basic income meeting — knock HARD,” it reads, and I do. I’m aware, after all, that the people inside are busy demanding revolution, and they might not hear me over the roar of optimism ringing in their ears.
Though pushing for major economic reform, these folks aren’t neocon lunatics or black block anarchists. Some might call them socialists, but that’s not right either; Milton Friedman, a notorious anti-socialist, once advocated the same policy this group pushes for. Subversive they are not.
Yet their solution to poverty, debt, and unemployment is still indisputably radical, at least in terms of how we tend to structure free market democracies. The people here tonight believe every Canadian, regardless of occupation or net assets, has the right to a basic living allowance, an annual stipend for each individual to spend as he or she pleases. In other words, they claim that giving away cash — no strings attached — could eliminate Canada’s poverty woes for good.
Meeting the movement
Just six of Basic Income Toronto’s members have assembled tonight in this makeshift headquarters. Unlike more established branches of the Basic Income Earth Network (BIEN) — a global nexus of municipal collectives — the fledgling Toronto division is just beginning to assign executive posts as I walk through the door. I encounter postcards, petition sheets, and passion, but that seems about as far as they’ve gotten.
Jon Sanderson, the jovial 30-something responsible for founding the group only months prior, shows me to a loveseat facing a pair of ‘deadheads’ looking like they just stepped out of a Volkswagon microbus. Surreal, I think, sandwiching myself between a soccer mom and a young man glued to his laptop. It seems I’ve landed on an unnervingly political misfit island.
“It’s not like Toronto doesn’t care about poverty,” says one of the group, earnestly trying to figure out how to represent basic income to city council. “Toronto absolutely does.”
Sanderson agrees. “What’s happening right now isn’t a lack of compassion towards solving poverty,” he chimes in.
“It’s just a lack of ideas.”
Their particular idea has yet to infiltrate the mainstream. “You’d be surprised how many people don’t know about this,” says one of the deadheads, clad appropriately, given the date, in a denim suit. “The lead investigator on CBC’s Marketplace, we were talking to him. He didn’t even know what basic income is. He’s the lead investigative economic journalist in Canada.”
The discussion continues, touching on everything from strategy to philosophy.
As I find out, basic income groups across Canada think economic vulnerability shouldn’t be tolerated in a country that can afford to spread its wealth around. Yet many of us remain on the margins. In Toronto, the situation creeps toward critical mass: 44 percent of all jobs are considered ‘precarious’ according to a recent study by United Way Toronto and McMaster University. That’s almost half of our workforce living day to day without security, benefits, or assured wages.
An allowance of $20,000 a year, the common suggestion, could make life substantially easier for many and only slightly worse for the richest few. Yet a basic income might intuitively seem like a costly alternative to the public aid systems already in place, such as Ontario Works, which assess a recipient’s need prior to handing out cheques. The justification for this is that those in dire need receive assistance, and those with a livable income don’t leech off others. But within the hope-laden homily of Sanderson’s living room, it’s possible to hear the beginnings of a rational argument, one that points out the absurdities inherent in the current welfare state.
That noise, the roar of burgeoning activism, isn’t just the eager clamour of a ragtag collective trying to save the country. It’s the new language of liberalism, and as they frame it, it speaks for us all.
The case for a revamped welfare state
I first met with Sanderson in the basement café of U of T’s Hart House. I’ve sat at that same table many times in the last four years, sometimes eating a frugal meal or splurging on a latte, but mostly just nursing a coffee and cowering at the prospect of post-graduate existence.
Like so many of my classmates, I envisioned life as an endless promenade of mediocre day jobs, my nights spent exhausted and struggling to eke out a career in the shadow of overdue loan repayments. My future, I suspected, would be one of debt and toil.
Today, sitting across from Sanderson, I listen to him opine on everything from Harperian economics to the history of money.
Beside him sits Sheila Regehr, an equally genuine retiree of the National Council of Welfare — though “retired” does not exactly describe her. After spending 29 years working with social assistance programs, she’s now the chair of the Basic Income Canada Network (BICN), a patchwork of local groups just like Basic Income Toronto, all of them busy lobbying for welfare restructuring. Over the course of three hours, I listen as Sanderson and Regehr engage in a kind of rhetorical dance, weaving for me a persuasive tapestry of socialist optimism. Between them, a clear narrative of our collective future unfolds.
The next twenty years, they say, will look much how I fear they will, barring serious policy overhaul. According to an oft-quoted 2013 study by Oxford researchers Carl Frey and Michael Osbourne, the near future could see a developed job market shrink to half its current size. Intelligent machines are to blame for the occupations at risk, which range from cashiering, to programming, to journalism. It’s already happening; the future stares us in the face every time every we use a self-checkout machine, and it won’t be long until we’re summoning driverless taxis.
Sanderson and Regehr see basic income as the single most plausible way for society to move gracefully past the ills inflicted by a projected upsurge in unemployment. “If we don’t respond to this rationally, through a basic income, we’re going to suffer some pretty serious social consequences,” notes Sanderson from across the table.
Regehr, sitting to my right, nods emphatically. “If you look at countries around the world that have high unemployment, huge steep inequality gaps, you have trouble,” she says. “History shows that you don’t really want a lot of young men hanging around with nothing to do.”
In her committed manner, Regehr tells me about a colleague whose company actively puts employees out of work, gradually swapping people for programs. “He’s worried about it,” she says. “He believes in the technology – he says there are things that technology can really do better than people can, and we shouldn’t be afraid of that. But if it’s replacing human activity then you really have to think about what our social structures look like.”
The most successful structure ever developed looks much like the basic income proposal, contends Sanderson. “In the Middle Ages the economic system was this,” he says. “The king had a stick. It was called the tally stick, and it had a series of notches in it. Those notches corresponded to another series of sticks, which he would distribute to the peasantry to [trade] however they wanted.
“The king then took the tally stick, shoved it into a lockbox, and put it away for a year. And every year they had a day where everybody got together, sticks in hand, and gave them back to the king. He tallied them up to make sure nobody had counterfeited any, and if everything was fine, then he would take them and redistribute them evenly amongst the populace again.
“That economic system lasted for 750 years,” Sanderson adds, smiling wryly. “No bumps, no booms, no busts.”
A redistributive scheme like the one Sanderson and Regehr describe may constitute a system for real life, one that allows us to have kids when we want to, take entrepreneurial risks, stop working entirely to care for sick parents, or go back to school. Our current institutional safety nets, in contrast, fall short of bridging the gap between security and destitution. If you’re receiving social assistance, you have very little wiggle room to adjust to life’s challenges. “Our systems don’t allow anybody to adapt to real life,” explains Regehr.
Thus the present system, says Regehr, does little for personal or public growth. “It’s humiliating, it’s demeaning, it strips you of assets, it treats you like a child — that part, I think, does the longest term damage to people,” she tells me. “And it’s ridiculous to pay money over and over again, year after year, to sustain people that way and never give them the chance to get ahead.”
“That’s the great absurdity, I think,” adds Sanderson. “The response we often get when we talk about basic income is ‘well, people are poor, people are homeless because they’re lazy’ …it’s a total delusion that people fall under because they seem to think that there are infinite jobs out there to be had.”
Yet there are always more people than jobs, Sanderson says, and that simple fact generates a responsibility, currently shouldered by the welfare state. “Even the wealthy admit that we can’t have people starving,” he continues. “That’s not acceptable. But you also can’t allow people to have freedom from a system — from wealth. The populace ultimately has to be answerable to the whims of the upper class. And so they’re willing to put a person in a state where they can have food and shelter, but they actively want it to be as uncomfortable as possible to incentivize people to get back into the workforce.”
The table goes quiet, thoughtful. “We live in a society where the wealthy have the right to withhold food and shelter from a person in exchange for their labour,” adds Sanderson, speaking gravely. “That’s a condition that I call wage slavery. And to me, you can’t say you live in a civilized society if you exist in those conditions.”
Punks on the dole
Walking towards the Queen streetcar on my way from headquarters, I happen to pass a three-storey house filled to bursting with young occupants living almost solely on welfare cheques. Peals of laughter precede the mob, gathered in mismatched benches and rocking chairs on the veranda — from the sounds of it, despite their robust poverty, these kids have found a reason to smile.
I sat on that porch only two weeks prior to interview my old friend Kayla*, who lives here with six other tenants, all of them making efficient use of their marginal space. Between them, they’ve got rent down to a manageable two-thirds of their respective monthly incomes. The girl sleeping in the cupboard under the stairs, I’m told, helps immensely.
When I inquire about life on the dole, Kayla answers with a surprising amount of affection. “The system itself is dehumanizing but in the end I’m thankful for it,” she says. “It’s saved my life.”
Yet problems with the provincial welfare system crop up during our conversion. Kayla explains that OW pays recipients like herself only $200 a month for ‘basic needs.’ A further $400 is allotted for rent expenses upon proof of tenancy. We laugh weakly at the pittance, but it’s not really funny.
“I make $12,000 a year, and I get by with that. But that’s only because I earn extra income through busking,” she says.
“And not everyone’s musically inclined,” chimes in Brian*, her housemate and a musician himself. Brian volunteers his spare time at the welfare office, teaching kids to play punk rock guitar solos.
“Yeah, and if you earn any money by working, they make deductions. It’s this really convoluted system. It’s not very motivating to get a job, especially if you can’t find gainful employment,” she adds. “It makes you feel like your time is worthless.”
Undeterred by these misgivings, Kayla remarks on the usefulness of OW’s health benefits and training programs. Any system replacing the one we have, she thinks, needs to include support mechanisms like these. Yet she stresses that OW does need revamping, both in terms of increasing provisions and updating eligibility rules. “When I went back to school they cut me off completely,” she says. “I was nearly homeless because I wanted to get an education.”
There’s another reason I came to visit Kayla. I’m curious about how individuals accustomed to bare-bones welfare income might use an unconditional grant — especially this odd group, obscured by tattoos and drinking beer at noon on a Tuesday. So I ask them what they’d do with $20,000 a year.
Brian snorts. “Oh Jesus. That’s a terrible question to ask a bunch of welfare punks,” he says, grinning. “I’d probably blow it. Nobody taught me how to budget — and welfare doesn’t teach you because they don’t give you enough to budget anyways,” he laughs.
But then he gets serious. “There needs to be a support network for people who don’t know how to handle lump sums,” he continues. “Addicts, too — you give an addict 20 grand and it’s gone. Like me, for instance. I drink a shitload. When I get my welfare cheque I pay rent and get fucking beer. It’s not enough to just give someone money and cut your losses — people who aren’t fiscally responsible will need help.”
Though Brian’s inclination doesn’t extend to the rest of the group. “Personally, I’d save up to buy property,” Kayla says.
Her partner and housemate, who works near full-time hours at multiple jobs, nods. “I’d budget out rent and living expenses. Then save as much as I could for rainy days,” he says.
Despite their insistence on the benefits of welfare services, the three of them agree that a universal grant would alter their lives for the better. With a basic income, “you’d be able to feed and take care of yourself without worrying about panhandling or squeegeeing,” says Brian. “Living like that — it’s fucking depressing.”
Money for nothing
Not everybody thinks a basic income feasible, despite the fact that it has promise. The most common rebuttal I hear, when pitching the idea to friends and family, involves the notion that handouts disincentivize work — that same McCarthy-era objection to any and all socialist policies. If you’re granted handouts, after all, why bother getting out of bed for a day of drudgery? There are jobs that need doing, the argument insists, and nobody to perform them unless they need the money to live.
The work disincentive obstacle persists despite studies indicating that income supplements have no negative effect on economic production. In the 1970s, a five-year trial in the city of Dauphin, Manitoba gave 7,000 residents a guaranteed minimum income — or ‘mincome,’ for short. The data show an increase in ‘work reduction,’ seemingly pointing out the shortcomings of giving away free cash. Some people stopped going to work. As the incentive to hold a thankless job dissipated, so did the rate of occupation.
But, as analysts eventually realized, the original work reduction data included individuals who left the paid labour force to take on unpaid, largely domestic work. Lumped into the ‘unproductive’ group were mothers able to quit their jobs to look after their families and older children who could return to school. As Regehr mentions during our chat, that’s not a true drop in productivity. All the mincome data showed was a shift from paid jobs to ones without wages.
Then there’s the laziness argument: the idea that able individuals will choose not to work at all — even domestically — in favour of unproductive activities such as television watching. “Some people might say, ‘why should I work when my taxes go to pay for some couch potato?’” says Dr. Toni Pickard, professor emeritus at Queen’s Faculty of Law and herself a basic income activist. “But that attitude is based on a misconception about who is on income support and what they do with their money. It’s a form of poor bashing, that’s all. The mincome experiment showed no work disincentive.”
Regehr also denies that there is any to the disincentive rhetoric. She thinks we need merely glance at human nature to shrug it away, a belief she insists upon during our Hart House meeting. “If you look at the way human beings are wired, physiologically, we are wired to work,” she says. “We are wired to be social creatures. We are wired so that status matters. You might have somebody who thinks he might want to just sit around and play video games and do drugs, but he very quickly realizes he will do whatever it takes to get status in his community.”
She smiles gently, continuing, “If you want a date, you’re going to be motivated to do something about that. You will be motivated to not upset your grandmother by doing something. We are subject to social pressure because we are social beings. That’s what being human is.”
Sanderson agrees, and proposes that basic income prototypes actually forecast an increase in productivity. “When people are involved in something they care about and they see a benefit for themselves and for society, and it’s not simply a drudgery that they’ve been inflicted with because they have to, then they’re going to work harder at it,” he says. “Those who walk around saying ‘people will just be lazy’ — I don’t think they even understand what humans are, yet alone what they’re even talking about.”
A World Bank study, conducted in 2014, backs the idea that welfare has no affect on unproductive activity. It showed that the tendency to buy “temptation goods,” such as drugs or alcohol, fell as income support rose. “They found that cash transfers have absolutely no impact on the purchase of temptation goods,” says Pickard.
It would seem as if a rise in self-sufficiency, such as that caused by a guaranteed income, eliminated the need to medicate for destitution, to find relief in a bottle of booze or pills.
Yet another study, conducted in the US in 1994, shows an increase in adverse social consequences when income rises through cash transfers rather than parental wage earning. Jonathan Rhys Kesselman, an economist at Simon Fraser University, published a critique of basic income in Inroads journal in 2013 citing that data. He points out that children who grew up in impoverished families were more likely to drop out of high school, give birth in their teens, and fail to find steady employment if family income rose due to public cash benefits. The study seems to suggest that parents with jobs produce more stable families than those who get money for nothing. “A dollar of transfers,” he writes, “is not fully equivalent to a dollar of earned income.”
The right support for the system
Kesselman’s objection represents a data-backed hurdle for basic income. Yet its proponents exist all along the political spectrum. So fundamental are the potential benefits of an income floor, that even conservative economists have embraced a similar idea. In the 1950’s, Milton Friedman espoused the advantages of a “negative income tax,” which would redistribute tax funds by taking from the rich and giving to the poor. Unlike a basic income, the wealthy would simply pay into the grant fund, while only the underprivileged received the cash.
“There’s a huge amount of cost associated with welfare programs,” explains Dr. Jack Carr, a Rotman Commerce professor who studied under Friedman. “Friedman thought the government didn’t trust poor people, and thought we should let them spend [the negative income tax] the way they wanted, rather than having expensive social workers to monitor welfare recipients. Instead of having welfare and employment insurance we could have a series of transfers.”
However, Friedman also advocated for a system of privatization, wherein public goods such as education would need to be paid for by those who wanted to use them. “Friedman thought that we should give everybody a limited number of vouchers to purchase social necessities,” says Carr. But this didn’t sit well with unions, he says, who “nixed” Friedman’s plan.
“Friedman’s idea is not churlish, but stingy and unrealistic,” contends Pickard. “And he believed you have to keep the work incentive in there by keeping the grant level quite low.”
Despite the similarities, basic income advocates today disagree with both Friedman and Carr, arguing that public goods must remain untouched and grants handed out universally. “Basic income, boom there you go, everyone gets it,” says Sanderson. “Negative income tax has more of a scaling effect.”
I point out the apparent redundancy of giving a rich person money only to take it away again.
“Sometimes people ask, ‘why even bother giving a basic income to someone who makes a million bucks a year?’” Sanderson replies. “I think there are philosophical reasons why it’s a good idea. It’s solidarity-building. Even a millionaire gets this thing — then he can’t throw it back at anyone.”
Another bite to basic income concerns minimum wage protection. It’s an objection advocates often hear from left-leaning critics. “One of the biggest dangers of a basic income is that conservative forces may try to claw back minimum wage,” says Sanderson. “I won’t be surprised if it becomes an either-or proposition: ‘we’ll give you a basic income if you eliminate the minimum wage.’ As if this is something we’re willing to concede.”
Yet that fear, Sanderson thinks, is no reason to reject basic income. Conversely, he suggests that basic income could ultimately have an empowering effect on minimum wage workers. “Companies are going to fight tooth and nail against basic income, because it means they either have to shut down their operations or they have to start paying people reasonably, at the rate they’ll actually do the work for,” he says.
“I think some corporations will have to work a little harder at retaining people, at paying people better and improving employment conditions,” adds Regehr. “If you get your basic income and have a job, then it gives you more leverage with your employer. You would be able to say ‘I don’t want these crazy shifts, so why don’t you give me two days in a row and not three hours at a time?’”
But the elimination of hard-fought labour rights programs — like Friedman’s plan to take away employment insurance or pension plans — constitutes a terrifying prospect for the working class. The contemporary revival of mincome, whatever the specifics of its format, often encounters resistance from unions due to anxieties like these.
“[Labour unions are] worried about protecting workers’ rights and labour market fairness,” Regehr tells me. “There’s fear that more right-leaning people might see a basic income as a replacement for all kinds of other things, which is certainly not the way any of our proponents envision this. This is simply a basic income floor — it’s only about income. It doesn’t mean that you don’t absolutely need labour regulation and public health and education.”
As if reading my mind, Regehr pipes up again. “It’s not Milton Friedman,” she adds, laughing.
From pipe dream to policy
In the 1700s, an English rope maker named Thomas Paine moved to America. After a stunning revolutionary career, he went on to write a short essay called “Agrarian Justice”, which argued that all people have a right to land and resources that others habitually claim for themselves. Upon reaching the age of maturity, he suggested, young men and women should receive a one-time stipend, a small amount to offset the loss of property once held in common.
The idea never took off, and though it sees a rebound in activist circles today, obstacles to its implementation persist. Perhaps the largest roadblock to realization is the sheer cost of such a policy. Though advocates believe there’s more than enough cash to fund a basic income and maintain the public services we now have, critics disagree. Even a modest basic income could incur “gargantuan” costs: Kesselman, for one, puts the figure at $350 billion. Moreover, he says, this money would need to be taken in part from other social services, which would be “crowded out” of the budget. Saying hello to free cash might mean letting go of public housing, subsidized day care, mental health services, legal aid — the list goes on.
But advocates contest Kesselman’s cost argument, as I find out inside Hart House. “At the end of the day you’re looking at about five per cent of the GDP to fund a basic income,” Sanderson says.
Regehr interjects. “There are lots of places to find the money — there’s a lot of room in what we’ve already got. Harper has given away more than $40 billion in tax revenue …mostly to silly things that benefit rich people,” she says.
They throw funding suggestions at me. Updating the tax system by tying it to inflation, they say, is a must, as is a redefining of tax brackets. “If you make $150,000 a year you’re paying the same as somebody who makes a million,” says Sanderson, pointing out the tax revenue lost on higher incomes.
Likewise, a small raise on the corporate tax rate could rake in substantial sums. Implementing inheritance taxes, something most developed countries already do, is also a no-brainer. And rejigging the current tax credit system, lumping together the current benefits into a single annual sum, could also contribute to the basic income bank.
They even suggest a penny tax on the financial transactions of private entities, a gesture that could raise millions for any government, according to the research of Edgar Feige at the University of Wisconsin. These many small levies, scattered about, would start closing the great disparity between the highest and lowest echelons.
“Then,” says Pickard, “we can look down the road. Basic income is going to reduce healthcare, justice, illiteracy, and other costs. It’s going to reduce what’s lost in productivity and tax revenues because people are too poor or sick or done in by poverty.”
In Brazil, a grant called the Bolsa Familia reaches 50 million people. It’s currently handed out to families with children, but aims eventually to shake that condition and bestow every person in the country with a solid income floor. Surprisingly, the IMF and World Bank actually helped design the system.
“These major financial institutions are learning that poverty impoverishes the whole economy,” comments Pickard. Too many low-income earners constitute a real threat to the future of capitalism. If we don’t devote measures to counteract technological unemployment, she says, there will be fewer consumers, and thus nothing stimulating the cycle of supply and demand. “After all,” Pickard quips, “robots don’t eat much.”
Two hundred years after the release of Paine’s radical pamphlet, it seems you don’t need to be a revolutionary to support his idea. “Basic income would benefit a unionist, a capitalist, a socialist; I don’t care what your ‘-ist’ is,” Sanderson says, one of the last remarks of our interview. He’s giving me a farewell pep talk, the crescendo of this diatribe, spoken just before we stand up from our tiny Hart House table. Our knees creak and our bottoms ache, but I’m so dazed with this influx of ideas that I hardly notice. My mind swirls.
And despite the barriers, I’m hopeful.
“There’s not a single person who wouldn’t be better off with a basic income,” Sanderson says. “And so it’s time for us to stand up and demand it.”
*Names changed upon request