Prime Minister Chretien has assembled a top-level committee to investigate the idea of a basic income, also called a guaranteed annual income. He says its not necessarily on his government’s agenda, but it should be. The idea has been supported by other Liberals, Prime Minister Lester B. Pearson for one, and by economist Milton Friedman.
Basic income would be universal — paid to every Canadian man, woman and child. It would replace welfare, child benefits, employment insurance, Old Age Security. In fact, Old Age Security is already a kind of basic income — paid to every retired person regardless of means. A basic income would be a more efficient and equitable means of distributing Canada’s wealth.
A basic income should be part of an overhaul of Canada’s social compact. Our current system of welfare and employment insurance is sadly out of date. It worked fifty years ago, after World War II when employment patterns were relatively stable. Our old social compact was designed for a time when unemployed were few and those on welfare were low.
Back then, homeless people were unheard of. Now, poverty is increasing at an alarming rate — especially for single mothers, for which the poverty rate is 50 per cent. We step over the homeless in our streets as if they have always been there. The squeeze is on everyone. Natural gas is going up, and wages are going down.
The government of Canada now ensures that millions of Canadians are unemployed as a matter of policy. The policy is called the Non-Accelerating Inflation Rate of Unemployment. It works like this. As soon as unemployment drops too low, the government takes this as sign that inflation is increasing. The Bank of Canada increases interest rates to tighten the money supply, which then increases unemployment to what they consider “normal”.
A basic income would ensure that unemployed Canadians receive an income regardless of whether they meet the high qualifications of employment insurance or not. A basic income could actually stimulate the economy through increased spending by millions of low income Canadians on basic goods and services.
Redistribution of wealth is not un-Canadian. As it is, the rich provinces of B.C., Alberta and Ontario give to poorer provinces. A basic income would be similar except that it would transfer money directly to individuals.
A basic income would not be taken away because a person worked, which would encourage the poor and unemployed to better themselves. Welfare and employment insurance discourages employment.
With a basic income, parents who stay at home with children (mostly mothers) would receive compensation for their work. So would those who care for aging parents (mostly women). With an aging population, a basic income could be a lifesaver.
A basic income would be federally administered, which is both its strength and weakness. The problem with welfare is that its administered by the provinces. When the feds find it expedient, they cut transfer payments to the provinces for welfare and let them take the flack.
With a federally administered basic income, the federal government would immediately come under attack if they tried to mess with the plan. Much in the way that they were attacked when they tried to cut other federal programs such as Old Age Security, the Canada Pension Plan, and employment insurance in the Maritimes. They quickly backed off.
The problem with federal administration of a new program is political. The provinces want to have control over spending. Also, after the last federal election, the country is divided into distinct political regions: West, Ontario, Quebec, Maritimes. No political region wants to grant any power to the federal government, regardless of how beneficial a program might be.
Another problem is one of perception, many Canadians consider a basic income as undeserved, since it is not earned by the sweat of their brow. But investors in stocks who receive dividends are not bothered. Nor is a landowner who possesses natural resources on his or her property. They happily sell the resources and enjoy the profit.
Well, all Canadians own the resources of Canada. A basic income is a dividend owed to everyone. Prime Minister Chretien recently said “The fact is that our prosperity is not shared by all”. He should listen to his heart and not the bean-counters tugging at his sleeve.