Pandemic has provided a unique opportunity to see how things could be different
COVID created basic income experiment
Where would the Canadian government find the money for a universal basic income (UBI)? What would the program have to look like to be successful? Would it actually be helpful in eradicating poverty and creating a fairer and more equitable society? As promised, here’s the second piece in the series on UBI. While I’m not an economist or sociologist, I’ve had the pleasure of consulting some, and they were able to shed some light on the subject.
“One of the appealing parts of a Universal Basic Income is that it would replace any other income support programs,” said Brett Dolter, an assistant professor of economics at the University of Regina. “This would simplify the delivery of the programs and should, in theory, reduce (government) administration costs.” By replacing other income support programs like Employment Insurance or Saskatchewan Income Support, the UBI would have the opportunity to absorb their intended purpose, while reducing the amount of resources required for the administration of multiple means-tested income programs.
Paul Gingrich, a retired faculty member from the University of Regina who works with Poverty Free Saskatchewan, pointed out that there would have to be cooperation between federal and provincial governments to be truly effective. The federal government has more taxing ability than provinces do, so some costs would have to come from the federal side, but many income support programs that would be replaced by a UBI are provincially run. “Personally, I would like a federal program,” said Gingrich, ” so there’s some uniformity across the country and some sort of consistency, so some provinces wouldn’t try to short their people or add tougher regulations.” A universal, federally-administered program would avoid the inequalities that have arisen with CERB, where SAID recipients in Saskatchewan who collected the federal pandemic aid had their benefits clawed back while recipients of provincial income support programs elsewhere in Canada did not.
One common argument against a UBI involves the cost of creating the program and maintaining it. While it would combine social assistance programs, those programs clearly weren’t doing enough anyway, so more funding would be needed for the program to live up to its full potential. James Warren, an assistant professor of sociology and social studies at the University of Regina, thinks the answer lies in the theories of French economist Thomas Piketty.
In the documentary Capital in the 21st Century on Netflix, Piketty explains that since we have a globalization of capital but not a globalized taxation system, businesses don’t have to work very hard to move their headquarters to a country where they’ll hardly be taxed, and where very little (if any) of the taxes they pay will go back into the economies they sell their products to. Essentially they make products as cheaply as possible in countries that have been deliberately underdeveloped by imperialism, mark them up as high as possible to sell in wealthier nations, and avoid taxation here so they can pocket more of their profit. The solution offered is a globalized taxation system where the companies would be taxed by each country according to the income they received from that country. To illustrate that, if 15 per cent of Nintendo’s sales came from Canada, 15 per cent of Nintendo’s profit would be taxed under Canadian policy, and any payment owed would be given to Canada. While a globalized taxation system may be decades down the road if it’s in the cards at all, it would do a great deal to balance the rapidly increasing global income gap, and would give our federal government extra wiggle room in the budget that could be used for a UBI program.
Dolter said his understanding of a UBI would be a program that includes everyone “by default.” Dolter said that “Currently, you need to apply to get into a program like EI and social assistance. This application process requires a lot of administration and so has a high cost to deliver.” Dolter also mentioned that according to his understanding the program would only be eligible for those under a certain annual income amount (likely the market basket measure described in the first UBI article), and those earning above that amount could either opt out of receiving their UBI payments, or pay them back during income tax season. This would give those who truly need additional income a way to acquire it without having to jump through the hoops our current system has in place, and would prevent those already earning an adequate amount from taking advantage of a system not designed for their aid.
According to Warren, “We’re living in a giant universal basic income experiment right now.” The social assistance programs that have been put in place to aid those whose incomes have been impacted by the pandemic are, essentially, basic income programs. Gingrich commented that he thinks “the current crisis has demonstrated that our current system of support is inadequate […] We’re at a historic turn in a way because this pandemic crisis has made people realize that something needs to change. It’s not on people’s radars when things are good, so this is a historic opportunity for Canadians to create a better system whether it’s a basic income or something else.”
I believe that the benefits of a properly run universal basic income program would far outweigh the costs (literally and figuratively). Let’s talk about health and well-being. According to the report “Health Disparity in Saskatoon: Analysis to Intervention” by Mark Lemstra and Cory Neudorf, children between the ages of 10-15 who live beneath the poverty line were 1,140 per cent more likely than their peers to have started smoking cigarettes. Low-income residents were 448 per cent more likely than middle-income residents to have an infant die within its first year. Low-income adults were 367 per cent more likely to experience suicidal thoughts, and 1,458 per cent more likely to attempt suicide.
Those numbers aren’t there by coincidence. Poverty has a cost, ironic as that is. Poverty impacts a person’s perspective of their self, the way they’re received (or not) by society, the ways they’re able to cope with life’s hardships, their ability to provide for their family, and both their physical and emotional health. Poverty is not a problem that will be solved simply by throwing money at it. However, since income is part of the problem it must be included in the solution, and a good place to start would be guaranteeing every person enough to live a dignified life.