For some strange reason, a pilot project for Universal Basic Income (UBI) that was cancelled in Ontario in 2019 is now getting all sorts of media attention.
Anyways, these pilot projects seem to become excuses not to further this social engineering tool. And they are certainly not “universal.” So we will never understand the full effect of the UBI to the economy until we actually go universal.
Besides Canada is already a partial UBI
And it is having a positive effect on the Canadian economy. Let me explain.
When my wife and I decided to have another child, we decided she would be a stay-at-home parent. The family budget lost her income.
Because my job provided a $35,000 annual income, we were able to remain solvent. The mortgage payments on our condo townhouse were still being made. We ate well. Our old cars were being repaired as needed.
But with two kids to support, a Canadian social program, called Canada Child Benefit, kicked in. We were getting about $700 a month from this program. Our gross income was now $43,000, with 20% coming from the federal government.
Let’s just say that this extra money was nice. It allowed my family to take a little vacation every year: three/four days in places like Great Falls or Waterton Park and see all the touristy stuff was relaxing and brought some family unity. The older son really liked seeing new things outside our hometown. Without the government benefit, these vacations would not have happened. I felt a little edge had been taken off us.
Here’s how this program works. Every year, Canadians file our taxes. We report our income for the year, and we report the kids we are supporting. Then some software puts the numbers into some accounting formula and determines the amount of our monthly Canada Child Benefit. If I were making $30,000, the benefit would be a little more than $700. If I were making $40,000, the benefit would be a little less. If I were making $60,000, the benefit would be quite small.
Here’s the beauty of this social program. It is truly universal. All Canadian families are eligible for the program. We automatically apply for it when we file our taxes, no additional paperwork is necessary. And the payments are reliable and consistent.
And the benefit is prorated to our income. So benefits do not go to wealthy Canadians. Nor does it encourage the recipients to quit their jobs. And for those families truly on the edges of poverty, this program keeps many of them off formal social assistance programs, which are more cumbersome, unreliable, and inconsistent.
My wife and I have used unemployment insurance from time to time. Currently I am drawing a government pension. I would say that these programs are also a partial UBI. And they are also universal. However, there are more forms to fill out and hoops to jump through to get these benefits when compared to the Canada Child Benefit program. This model is, administratively, very simple.
Another Partial UBI Payment
My vision is that every Canadian gets a partial UBI payment — as a citizen. This payment would be determined from the filed tax return, based on the income numbers. It too could be prorated, with higher incomes receiving less of a benefit.
I recommend $200 a month to start this program. This would definitely help the low-income citizens, giving them a few more economic options to their daily struggles.
The Ontario pilot project was far more generous than my $200. But from my brief reading, most of the recipients did not stay in the same economic place. Some of the recipients quit their crappy jobs and went to family care, volunteer, and/or watching TV. Some went back to school or started a small business. Some kept their crappy jobs, accepting a prorated UBI payment of 50%. Some were able to find better work — and also took that prorated UBI payment. All recipients had a little more money than they had before, which took some edge off their life. Yes, they were a happier bunch.
But, if anything, I believe this pilot proved that a generous UBI will be disruptive to the economy. Many will quit their crappy job. There will be fewer people to do the crappy work that still needs to get done.
So this is why I suggest starting UBI with $200 a month. All low-income people get some help, not just those recipients in the pilot. Most recipients will not quit their crappy job because they get a small UBI. Economists and sociologists should be watching the results of this $200 payment. If the economy seems to be doing fine, increase the payment later. We really want to move people out of the stress of poverty, so they can make better life decisions.
In the meantime, the crappy work still gets done. The economy needs to slowly adjust to the new UBI payments. If we let the free market work its magic, I suspect the much of the crappy work is going to become better paying when UBI is more fully implemented.
Biased Pilots
In all the UBI pilot studies I have read, the recipients were preselected to provide a good outcome of success. It seems that citizens with serious life problems were not part of the pilots.
Most of us would realize that giving a UBI payment to the addicted or chronically jobless is most likely not going to change that person for the better. So advocates for UBI avoid that outcome by not giving these people a UBI in the pilots. Instead they find poor people who are more likely to find success with the extra money. Then the advocates can say: “Hey, 92% of recipients moved forward with UBI payments.” This gives the impression UBI is a cure for poverty for everyone. But, in truth, a deliberate bias has been put into these pilots.
This bias is holding the implementation of a UBI back. The conservative side of public opinion believe that the UBI will be “wasted with the wrong people.” To placate this demographic, a UBI might be designed with sobriety or disability tests to get a UBI payment. If so, we have missed one of the important objectives of a UBI: universal. And people will fall through the cracks.
And a $200 UBI payment would be more acceptable to UBI critics than a $1200 payment. Recipients will not quit their crappy jobs.
Rather, the filed taxes should be the only criteria. Let the citizens spend the stipend as they see fit. Just like the Canada Child Benefit has no such oversight today.
And I believe when everyone gets their UBI, we will see less petty crime, like shoplifting. That will have a positive, albeit indirect, impact on the economy.
Conclusion
We should start slowly. Most UBI advocates want to move too quickly, oblivious to the unintended consequences to the economy, which should be obvious.
We should stop the pilot projects trying to prove the worth of UBI. Each pilot project only delays when we can move into a true UBI.
The model of the Canadian Child Benefit is an excellent tool to distribute UBI payments.
Published on Medium 2024
