Jordan Heath-Rawlings: You can say one thing for the current crisis, it’s given us a chance to try a lot of things that we might never have had the will to do otherwise. First amongst those, just giving people money. Okay. Not everyone, but millions and millions of people in Canada, and not forever, but at least for a few months, and this isn’t a new idea.
It’s been around in some form or another for decades. You probably know it as universal basic income, and you might associate it with the most progressive voices on the liberal side of the spectrum, and you may also associate the opposition to it with complaints of lazy people who want free cash instead of working.
But despite having a long history as a potential way to ease poverty and improve health, this has never been tried on a large scale or for a long time. So the people arguing on either side of it have never had enough evidence to prove their point. So it’s been a political football until like with so many things these days, along came the virus, and now getting money to people who need it quickly, is absolutely essential.
In governments around the world, even the most conservative of them have done that, and those who support or oppose that kind of policy have mostly agreed on the need for it. It’s what happens next and what we learn from it, that will determine if we finally give a universal basic income a real shot. So we’ll explain the history of the policy, the small tests that we’ve seen on it, the political fight behind it, and whether or not it will stick around when we get out of this current mess . and we’ll do that as soon as Claire gives us the details on this current mess.
Claire Brassard: Cargill is dealing with another outbreak at one of its meat processing plants. This one is in Chambly, Quebec, Southeast of Montreal. 64 workers have tested positive there. Cargill had another outbreak a few weeks ago at a beef packing plant in high river, Alberta. In that outbreak, more than 900 workers tested positive. It reopened last week after a two week shutdown. Also in Quebec, elementary schools in the Western part of the province are set to reopen today, but attendance is optional. Desks will be spaced apart and there can be no more than 15 kids in a classroom at a time. Ontario reported the lowest number of cases of COVID-19 for the province on Sunday, since March. 294 new cases, and this comes as the province reopens provincial parks and conservation areas, although camping is still not allowed and things like beaches, playgrounds, and public washrooms are still off limits. And lastly, Saskatchewan is suspending the sale of alcohol in the Northern community of La Loche to help control the spread of COVID-19 The alcohol store will be closed for two weeks to prevent people from gathering. There will be support for those at risk of alcohol withdrawal. As of Sunday evening, 68,848 cases of COVID-19 in Canada with 4,970 deaths.
Jordan Heath-Rawlings: I’m Jordan Heath Rawlings. This is the big story. Max Fawcett is a writer and a reporter for many publications, including on this project for the walrus. Hey, Max. Hey Jordan, how are you? I’m doing as well as can be expected, which is how everybody should hopefully answer that question these days. Why don’t you start by defining what is a universal basic income? How broad is that term and what does it mean.
Max Fawcett: Sure. So I mean, you know, this is an idea that’s been around for some time now and there can be competing definitions and I suspect we’ll get into that in a second, but the one that I adhere to and the one that you know, certainly informed, you know, Andrew Yang’s campaign in the United States and that has been informing most of the conversation about a UBI right now is, it has three conditions. It’s, it’s automatic, it’s unconditional, and it’s non withdrawable. So basically that means it comes every month. Doesn’t matter who you are, you get it. Uh, you know, you could be making a lot of money or a little money and you get it, and then it’s non withdrawable. So, uh, it’s not means tested so it doesn’t get clawed back. Um, you know, as you, as you make more money, you know, there’s much conversation on it, you know, Econ, Twitter about, you know, various amendments and, and, uh, adjustments to that formula. But I think that’s a good way to think about it.
Jordan Heath-Rawlings: Can you give me a little history of it? You mentioned it’s been around for a long time. Uh, has it been tried. For real, anywhere, uh, where’d it come from?
Max Fawcett: Yeah. I mean, I guess that depends on your definition of for real.
Jordan Heath-Rawlings: Right.
Max Fawcett: I think people look at the idea of giving people money from the government and they think, well, this must be a left wing idea. But actually, you know, the first. Real experiments with it happened in the 1960s and early 1970s and it was driven by Richard Nixon and Milton Friedman, who is the father of supply side economics.
Jordan Heath-Rawlings: Hm.
Max Fawcett: Yeah. They saw it as a way to replace the welfare system, and so they, their idea of a basic income, it’s not quite the way that I just defined it. It was something called a negative income tax. Um, and so let me just get a tiny bit wonkish here. The way it worked in their conception is basically they would give people a percentage of the difference between their income and a defined income cutoff, or like the point where they start paying income taxes. So if they set the cutoff at, let’s say, $40,000. And the negative income tax percentage was 50% someone who made $20,000 a year would get $10,000 from the government. They made 35,000 they would get 2,500 from the government. So it was this sort of sliding scale, uh, where it topped you up up until a certain point, and then it went away.
Jordan Heath-Rawlings: Right.
Max Fawcett: They canceled it in 1980 and, and you know, the, the Reagan era kind of buried it under, under, you know, Nixon’s legacy. Uh, in Canada we did something called the mincome experiment, which was the Manitoba basic income experiment that was more, that was closer to the basic income that I described earlier and the one that a lot of people are talking about right now. So that, uh, that gave, I guess, 1300 urban and rural families in Winnipeg and Dauphin Manitoba, uh, you know, with incomes below $13,000 a year back then, money. Uh, but by the time that the data was collected in 1978, so they ran it from 75 to 78. The Canadian government kind of lost interest and, and they canceled the project. So we’ve had these, you know, these aborted, uh, attempts to gather a sample, and it hasn’t really provided any, any conclusive evidence, uh, in the, in the American one. There’s some evidence that it, that it, you know, uh, negatively impacted people’s willingness to go to work. Uh, in the Canadian one. The data suggested otherwise, but there just wasn’t enough data to conclusively determine the impact of giving people money on their, both on their willingness to work and on, on their, you know, the outcomes that the governments wanted to test, which is, you know, better health outcomes, better labor outcomes, better social outcomes. So, you know, the, the jury was still out.
Jordan Heath-Rawlings: Right, well, what kind of uh, sample size and study length, would you even need to determine that? Because again, we had one, or at least something like one here in Ontario, uh, under Kathleen when a few years ago and the next government came to power and it was immediately phased out. So, you know, I don’t think we got more than two or three years out of that either. So what kind of scale are we talking about?
Max Fawcett: Yeah, I mean, to make it work, you would need multiple cities, multiple test populations, and a long duration of study. This is a, this is a, a bold policy intervention, but you need to be able to control for extenuating circumstances and factors. Uh, you know, the Ontario project was, it had some really promising results as it turned out. There was a study group at McMaster that basically interviewed the people that participated in the program. You know, some of the data, you know, they had 80% of people reporting better health outcomes. They were using less tobacco, drinking less. 83% said they had better mental health, that they were feeling less stressed, they had a better diet. Um, and there was even, you know, interesting data around, um, better labor market outcomes. People were basically using the minimum income, the guaranteed income to improve their jobs, to look for better jobs. So it’s disappointing that the government scrapped it after basically what amounted to one year. And it left us in the same spot that we’ve sort of always been with these things where we just don’t have enough data for either side to conclusively prove that their argument is right. And you know, maybe now, maybe now is the opportunity to kind of lock in that. longer, uh, sample size. But you know, the problem here is that it’s always tempting for governments to, to start these programs and then abandon them, uh, or different governments to come in and cancel them. You know, you’d need some sort of agreement by all parties that they’re going to let this run its course and we haven’t really seen that yet.
Jordan Heath-Rawlings: So you mentioned that it’s seen mostly, now at least, as a left wing idea that might’ve begun under Nixon, but certainly I think that’s how most listeners would frame it, as, you know, uh, whether or not you support it, uh, that’s the side of the spectrum that it comes from. But as we’ve started to see governments realizing how badly they need to help people as the economy collapses during this pandemic, have we seen any movement on the other side of the aisle towards this kind of idea?
Max Fawcett: I think we’ve seen much more movement on, on the conservative side than we have on the progressive side. You know progressives are, are, are very wary of guaranteed income proposals. Because I think, you know, quite rightly, they remember certainly the academics who study this, they remember that it was originally an idea that was intended to get rid of welfare and other social supports, and that is always a concern that, you know, if you bring in a guaranteed income, is it really just an attempt to shrink the size of the state? Is it an attempt to get rid of targeted support programs that make people’s lives better? And I think that’s a totally valid concern. You know, when I, when I posted my, my article from The Walrus on Twitter, I got a lot of feedback from economists about that where they basically said ‘oh, here we go again’. People, people don’t realize that this is a, an attempt to slip in through the back door or reduction in social programs.
Jordan Heath-Rawlings: That’s really interesting.
Max Fawcett: Yeah. But, you know, over the last few months, we’ve seen a really unexpected array of conservatives come out and say that this is a good idea. You know, Hugh Segal, who was a, uh, you know, former Senator, longstanding red Torrie, uh, I would, I would describe him as a thought leader. Um, he’s been, he’s been banging the drum for, for a guaranteed income for quite some time now, but he was always sort of out there in the wilderness, uh, you know, as a conservative, suggesting that this was a good idea. Um, you know, and he wasn’t one of the ones who was saying that it should replace social programs. He was saying that it, it, it should be an augmentation to them. Uh, but you know, in the States over the, over a matter of weeks, you saw people like Mitt Romney who is basically the avatar of hedge fund capitalism coming out and suggesting that this was a good idea that would support Americans during the fallout from COVID. And you know, ultimately, you know, Donald Trump’s government, it’s not, it’s not a permanent basic income, but they sent a check to every American, and that is sort of one of the hallmarks of a basic income. So. It’s interesting the degree to which we’ve seen conservatives kind of rally behind this particular policy flag. I think that it is driven by shorter term political objectives. You know, American politicians have an election that they’re looking at in November, and one of the surest ways to get defeated is to be in, you know, be in government while people are losing their jobs, losing their homes, losing their livelihoods. So I think it’s more self preservation than a genuine change of heart. But you know, from a policy perspective, you, you take the support where you can get it and you build on it from there. So. You know, I think advocates of a UBI should take their support and, and leverage it, uh, in order to build their movement.
Jordan Heath-Rawlings: If you can maybe explain to me the thought behind the benefits of this applying to absolutely everyone, including people who have a job, because that’s really, uh, and, you know, we can debate Canada versus the US for however long, but that’s, that’s like the primary difference between, uh, what Trump’s government has done and what Canada’s done with the CERB.
Max Fawcett: Yeah. That’s the tricky part. That’s the part that a lot of people struggle with conceptually and intellectually is, is the idea of giving people who don’t need money more money. Right. And Ken Boessenkool who is, is a, you know, he’s a former advisor to Stephen Harper and Christy Clark. He’s been kind of driving the bus in Canada around the need for a UBI. You know, he’s, he has preferred that to the more targeted approach that the government has taken with CERB. You know, his idea in the short term is w we just need to get money into people’s hands right now. We need, we need to stimulate the economy. And, you know, ultimately we’ll tax it back next year on people’s income taxes. I mean, that’s the thing about, you know, a guaranteed income in the context of the system we have here is if you’re making $60-70,000 a year, this is going to, a portion of this will get taxed back. Right. Um, and so it’s not, it’s not really free money. It’s a little bit of free money. And I suspect there would be some social programs that would get pulled back a little bit to make the numbers work. But you know, at the end of the day, I don’t think you can let the weaknesses in the policy that that might impact a few people override the benefits that would impact far more people. There’s, there’s all sorts of data out there that suggests that, you know, a basic income would actually stimulate economic growth. There’s all kinds of data that suggests it improves health outcomes. And, you know, Lord knows improving health outcomes would save taxpayers and the government a lot of money because that’s, you know, where an increasing, increasingly large part of our social budget is going and will continue to go in the years and months to come. So, you know, it is, uh, it’s a tough idea to get past for some people that, you know, if I’m working already, why should I get more money from the government? But if that money is going back into the economy and it’s stimulating economic growth, it’s supporting jobs, it’s reducing healthcare costs, you know, I, I think there’s a pretty good case for it. And, and, you know, it’s one that we should be willing to explore. I am. I am more than open to criticism about the cost factor of it, and I suppose we can get to that in a second, but I think we also need to look at the benefits and look a little, a little bigger in terms of where those benefits might accrue. It’s not just lifting people out of poverty, although that’s, that’s an obvious benefit. It’s also improving people’s health outcomes, improving their labor market outcomes. It lets people who have a job they may not enjoy, it gives them a buffer where they can look for a job that they do enjoy. And, you know, I’ll go sort of a little bit socialist on you here. Um, you know, I, I remember reading John Maynard Keynes back in, you know, in university and his whole sort of theory of, of economics. Progress and growth is not just to increase GDP, but it’s to increase our opportunities for leisure and happiness. You know, the point isn’t the keep working all the time so we continually grow the economy. The point is to, you know, grow the economy in ways that improve the quality of life for everyone. And so if that means, you know, if having a basic income means that you can dial back on a job that maybe you don’t like or, take more vacations or work four days a week rather than five. I don’t think that’s a bad thing necessarily, and I think we should be willing to have a conversation about, you know, what the economy is actually for, uh, and, and why we’re actually working in the first place.
Jordan Heath-Rawlings: Well, that leads right into the talking point I was going to ask you about next, which is of course, and we’ve even seen this come up a little bit around the CERB, which is that people won’t want to work if they already have money in their pockets. And you know, I won’t get into what I think about this. This is not about that. But what is the argument against that? And do we have any proof?
Max Fawcett: It’s a, it’s a reasonable concern. You know, that if we give people money, they will. You know, not want to work, they’ll become lazy. You know, spend thrifts who are feckless and don’t contribute to the moral fabric of society. You know, yada ,yada, yada. I that, that is a, a fair concern. The limited data we have from, from previous basic income trials, including the one in Ontario suggests that it doesn’t actually, decrease people’s willingness to work that much. It also creates an important buffer for some groups who may have to work, but would benefit from having options. So, you know, I’m here, I’m thinking about, you know, women who are perhaps in, in difficult relationships and, you know, need to work to pay the bills. But if they could, you know, take advantage of a basic income, maybe they could get away from an abusive partner or spouse and strike out on their own. Like there’s lots of use cases here for a basic income that uh, goes just beyond the willingness to work and, and measurements of that. But again, I, you know, I sort of pull it back to the, to what I was talking about a second ago. I think we have need to have a conversation about why we work, what the economy is for and, and whether simply always pushing people to work 40 hours a week or more is necessarily a good thing. One of the interesting things I’ve, I’ve read about the decline of the middle class over the last 20, 30 years, and it comes from, from research that Elizabeth Warren did before she became a politician and a Senator, is that, you know, the increase in incomes that we’ve seen is actually not been driven by people getting better jobs or, uh, people, you know, increasing productivity, but us going from a one income household to a two income household. And what that’s actually done, is it’s made us less resilient. It’s made us more vulnerable to economic shocks, to recessions, to viruses, what have you. And so maybe a basic income allows, whether it’s the man or the woman, the ability to work less and by extension to create a little more resiliency in the average household.
Jordan Heath-Rawlings: Right.
Max Fawcett: So there’s all sorts of interesting conversations that get opened up by, by a basic income. And I think it would be a shame if they got interrupted or undermined by this sort of, you know, Protestant work ethic, uh, concern, which, you know, misses the point of why we work, why we have an economy, why we create wealth. Is it creating wealth for wealth sake or is it creating wealth so that we can increase our happiness? And I would prefer to see the conversation go in that direction. And I would also point out, you know, I don’t think people necessarily work just because they make, they make money. Obviously making money is a huge concern. I’m not gonna deny that in the slightest, but shouldn’t we hope that people work because it makes them happy because it gives them fulfillment because it creates meaning. Those are the jobs that we should ultimately all want to have and we, we can’t all have them now and we probably couldn’t all have them in the future, but we should be trying to move as many people as possible from the bucket of have jobs because they must to have jobs because it brings them fulfillment. An\d I think a UBI is a, is a kind of neat way to bridge those two buckets.
Jordan Heath-Rawlings: Well finally now we have to talk about how we pay for it, because looking at the numbers just from the CRB, which again does not go to everyone and is not a forever. That money is staggering and to do it on the scale of a national program, where does that money come from?
Max Fawcett: Yeah, it’s, I mean, look, it’s eye watering the amount of money that this would cost. I, I’m not going to, I’m not going to sugar coat that. I, I think part of it is you, you definitely can achieve some savings. Not, not in terms of a, with necessarily a withdrawal of social programs, because again, I think that’s a nonstarter quite rightly for a lot of people, but I think there are clear healthcare savings over the long term that you can sort of build into your estimates. There are economic stimulus benefits that you can build into your estimates, and maybe there are some programs where there is the duplication. Uh, you know, maybe it’s welfare, uh, where people are already getting a check. So swapping one check for another is not going to be, it’s not going to have unintended consequences for families, but, you know, we, we have for the last 20 or 30 years, I think, been slowly choking the fiscal capacity out of our, out of our federal government. You know, the, the, the conservatives in the early years of the Harper government cut the GST from 7% to 5% strictly because it was good politics and it was good politics. It helped them get elected, but it, it’s not good policy. So I do think there’s room to, to restore the GST. You know, that’s, you know, I think $8 billion give or take per point of GST. Uh, we don’t have a wealth tax in Canada. I think we’re seeing the conversation around that start to build in the United States. And I could easily see it building here. I don’t think there’s any really good argument against taxing those who, who have, you know, tens of millions or more of wealth, a little bit of money, you know, you know, not confiscatory rates, but I think they can afford to pay a little more. And we could be going after tax shelters, people who are, you know, we’re storing money in places like Panama and the Cayman islands. I think an effort to go after those sorts of funds would, would bear some fruit. So there are ways for us to increase uh, the taxes that the federal government collects without having a negative impact on the economy, on average households, on people’s ability to grow their own wealth. It’s just, it’s a balancing act and it’s a conversation we have to have and have to find the courage to have. Yes, it will cost money, but you know, if taxes are the price we pay on civilization, I suppose the question is how much civilization do we want? And, and that’s sort of where the rubber meets the road on a UBI. It’s not, it’s not free, and it’s not necessarily gonna come without some sacrifices, but I, I am willing to entertain a conversation about those sacrifices because I think the benefits could be, could be even bigger.
Jordan Heath-Rawlings: That’s a really interesting place to end at. Thank you, Max.
Max Fawcett: Thank you, Jordan.
Jordan Heath-Rawlings: Max Fawcett writes for the walrus among other publications.That was The Big Story. If you would like more, you know it. We’re at thebigstorypodcast.ca. You can find us on Twitter at @thebigstoryFPN and you can reach us by email anytime, whether that’s with text or audio or video. The address is firstname.lastname@example.org. We’re also in your favourite podcast player, whichever one that happens to be, and we are waiting for your rating and review. Thanks for listening. I’m Jordan Heath Rawlings. We’ll talk tomorrow.
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