The Case for Basic Income

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Automation is inevitable. Already, millions of people are losing their jobs to robots and artificial intelligence that can do tasks more efficiently and less expensively than humans. This past April the Senior Deputy Governor of the Bank of Canada, Carolyn Wilkins, stated that while Canada is poised to reap economic benefits from technological progress, it must also brace for potentially painful side effects like job losses and greater income inequality. These concerns have been voiced across the developed world, as many experts predict that automation could include impacts on close to half of all jobs in some industrialized countries within twenty years. However, while automation is a real threat in the global north, the threat is much worse in the global south. The main industries in the south are some of the easiest to automate, such as small electronics and textile manufacturing. According to a UN report, up to two-thirds of jobs in developing countries could disappear in the near future.

In light of this new automation revolution, much attention has been turned to the concept of basic income- a form of social security in which all citizens or residents of a country regularly receive an unconditional sum of money from the government. Once a fringe idea, basic income is now making its way into the public imagination. Trials are already in place in Finland, Scotland, Kenya, the Netherlands and California, while cash transfer programmes have proven to be successful in Namibia, India and dozens of other developing countries, sparking what some scholars have described as a development revolution from the global south. In Brazil, cash transfers have helped to cut poverty rates in half in less than a decade. Basic income has received strong support from leaders in the tech industry like Elon Musk, as well as politicians like Bernie Sanders. With a steep demise in manufacturing jobs, the political world has been divided into two camps– those who believe the job losses are primarily a result of open trade or foreign competition (one only has to look to the election of Donald Trump to see this phenomenon at play), and those who believe that technological progress and innovation is to blame. Among those of the second camp, basic income is gaining traction as a viable solution.

This summer the Wynne government is introducing basic income to three cities across Ontario, and will be examining the policy’s impact on health, education and employment over the course of the pilot. Basic income is unique in that it holds appeal across the political spectrum, and in Canada has been supported by various politicians from the New Democratic, Liberal and Conservative parties. The political right likes basic income’s emphasis on reducing the traditional welfare system’s punitively high clawback rates on benefits and finds it less paternalistic than the welfare state in its current form. On the other hand, the political left is attracted by basic income’s promise of a social safety net that is simpler to navigate and less intrusive of people’s lives as well as basic income’s general egalitarian impulses. The current welfare system is in many ways a bureaucratic and administrative nightmare. Basic income would change public housing, food assistance, Medicaid and other welfare elements’ current existence as separate entities and replace them with a single check.

The main point that critics of basic income make is that it would act as a disincentive for people to work. However, there is empirical evidence that cash handouts do not make people less likely to work. In many cases basic income has increased labour activity, especially in providing recipients with the financial security to quit unfulfilling jobs and launch entrepreneurial ventures. Nixon’s basic income experiment in the early 1970s found that young people tended to spend more time invested in education. Increased education and innovation can only be seen as positives. Because basic income would reduce the ‘welfare well’ that keeps people on government handouts, it would see more people engaged in the workforce, raising government revenue in the long run. From that perspective, there is no increase in costs to government with a basic income system. Were higher government revenue required to fund such a program, the added tax burden could be put on corporations. As renowned economist Paul Krugman argues, since big corporations are seeing an ever-larger share of total income, they are consequently in a better position to pay increasing taxes.

In countries as diverse as Canada, Brazil, Kenya, Namibia and Mexico, basic income trials have ben linked to reductions in malnutrition, crime, child mortality and improvements in indicators of education, equality and economic growth. There is also the ethical arguments in favour of basic income, pointing to the social and moral imperatives of providing citizens with an income floor at a time of rising concern over automation, structural unemployment and growing inequality. However, basic income must be done right. Instead of being a formidable bulwark against poverty, a poorly funded basic income program could produce a vast under-class even more dependent on whoever cuts the cheques. A truly beneficial and equitable basic income system must be arrived at through the vision and the struggle of those who need it most, ensuring that it meets their needs first, and not merely the desires of the wealthy. Basic income must be cast as a right for all and not charity by the rich. While many countries’ basic income policies are still in trial stages, it is a system that must be strongly considered going forward into this age of unprecedented automation.

Written by:

Darren Elias

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