Money for a post-work world
Silicon Valley is a fan, but does basic income have a fighting chance?
In May 2017 Mark Zuckerberg took to the stage at Harvard University and used his commencement address to call for something that even a few years earlier would have been regarded as radical, at least coming from a capitalist billionaire: Governments, he said, should start giving everyone a regular paycheque, no strings attached. “We should have a society that measures progress not just by economic metrics like GDP, but by how many of us have a role we find meaningful,” Zuckerberg told his audience. “We should explore ideas like universal basic income to make sure everyone has a cushion to try new ideas.”
Zuckerberg is far from the only member of the Silicon Valley zillionaire class to advocate strongly in the past couple of years for governments to provide some form of guaranteed minimum income to their citizens. Citing the spectre of artificial intelligence-driven automation, Elon Musk told the World Government Summit in Dubai last year that “there will be fewer and fewer jobs that a robot cannot do better…I think some kind of universal basic income is going to be necessary.” Meanwhile Sam Altman, the head of venture capital accelerator Y Combinator, is setting up an experiment that, over a five-year period, will give a thousand people across two U.S. states US$1,000 per month. He’s driven by the belief that somewhere between ten years and a century from now, AI* will have so devastated the job market that governments will be forced to hand out cash en masse to stave off unrest. “Do people, without the fear of not being able to eat, accomplish far more and benefit society far more?” he asked in a blog post. “It’s impossible to truly have equality of opportunity without some version of guaranteed income.”
Boiled down, the message emanating from Silicon Valley these days is that the world is headed for a post-work future. Rapid advances in artificial intelligence, robotics, and 3D printing will eventually render obsolete even those jobs once thought of as automation-proof. As we work fewer hours each week, or step back from the workforce entirely, productivity in the creation of goods and services will continue to rise, fuelling economic growth and increasing national wealth. A guaranteed income, the thinking goes, will not only cushion the transition to a workerless economy, but allow us each to explore, create and innovate to our full potential, freed from the shackles of our nine-to-five work lives.
Not so fast, argues Evelyn Forget in her new book, Basic Income for Canadians: The Key to a Healthier, Happier, More Secure Life For All. The story being peddled by Silicon Valley these days is engaging, she writes, but overly simplistic. “It is, in fact, a kind of zombie economics: an old idea that keeps struggling back to its feet no matter how many times history tries to kill it off,” she writes. Deep thinkers have been imagining a world without work since at least the nineteenth century, she notes, citing examples ranging from John Stuart Mill through to John Maynard Keynes. Keynes thought that by 2030 we’d be down to fifteen-hour work weeks, a development that would free us to enrich our lives with art, education, and friendship. Evelyn Forget could also have included in that set the architect and theorist Buckminster Fuller, who in 1964 told a financial columnist that, “just fifty years from now the word ‘worker’ will have disappeared from the American language. We will have to look it up in the dictionary.” Instead, Fuller argued, industry and government would employ citizens through fellowships—a variant on a basic income—allowing them to educate and better themselves.
Yet here we are, still toiling away with unemployment rates at multi-decade lows. Instead of eradicating work, technology has done what it will surely always continue to do: create more jobs than it destroys. What matters far more in Forget’s view is the quality of those new jobs. And it is the rise of precarious labour, reflected in the side-hustle economy, piecemeal freelance gigs, and endless contract positions, which basic income is perfectly suited to address, by providing a measure of insurance against job insecurity.
One might expect that an advocate of basic income such as Forget, an economist at the University of Manitoba, would welcome even the most utopian hyperbole coming out of Silicon Valley on the subject if it helps to further the ultimate goal of bringing a basic income program to life. But that’s the problem. It isn’t helping.
Forget’s book arrives at a trying time for advocates of basic income, who saw the concept fall out of favour in the late 1970s, only to be revived in the wake of the Great Recession. Momentum seemed to pick up in 2016 and 2017. Ontario launched its basic income pilots in Hamilton, Thunder Bay, and Lindsay. Prince Edward Island had its own pilot in the works. Meanwhile a number of international experiments had got under way, in Finland, Barcelona, India, and Kenya.
Then came the abrupt decision this summer by Ontario’s Conservative Premier Doug Ford to kill the province’s basic income experiment with no warning—and counter to his own promises during the election. It was just the starkest example of the shifting political winds working against basic income today. P.E.I.’s pilot project never got off the ground. Even internationally the push for basic income has not gone entirely smoothly. Finland’s experiment, launched in 2017 and ending this year, failed to attract further future backing from the government. The designers of the experiment, which currently pays two thousand unemployed Finns €560 ($840) each month, had hoped to expand the program to included employed Fins, too. However, the government has indicated it wants to examine other ways to reform the country’s social security system. “The eagerness of the government is evaporating,” Olli Kangas, one of the experiment’s designers, told the BBC in April.
For a time, basic income seemed to be one of those rare issues that found support across the political spectrum. The left could get behind it for its potential to end poverty. Meanwhile the right appreciated one of the central principles of basic income, that unlike traditional social security and welfare systems, a basic income comes with no strings attached, giving poor recipients the freedom to spend the money in the ways they feel best help their families, without the need for a sprawling bureaucracy scrutinizing how recipients spend every dollar and hour of their time. But in this deeply divided era, political battle lines have been drawn through basic income too, with opposition to it deepening, and hardening along partisan lines. Growing numbers on the left view it as a sop to low-wage-paying corporations intent on dismantling regulations and the welfare state, while on the right there is heightened concern that basic income simply rewards people with taxpayer money for working less. In such an environment, there’s not only less support for the idea from both sides; there’s also little room for compromise.
As much sense as basic income makes—and Forget makes a strong case for the idea—it’s hard to imagine it happening in this political environment. Forget’s book is an attempt to counter the most extreme claims made in favour of and against basic income, bring fact and context to the debate, and present a practical guide for how to put a basic income program in place in Canada.
Before going too deeply into the political hurdles facing basic income, it’s worth taking a moment to appreciate the possibility and potential in the idea. First, it helps to know exactly what’s meant when we talk about a basic income, and what type of income guarantee Forget envisions when she says “a basic income is feasible. It is not a theoretical construct with no possibility of real-world application.”
She is not referring to a universal basic income (UBI), the type Zuckerberg and so many others have championed. In that scenario, government would deliver the same equal paycheque to every citizen, rich and poor alike. Kevin Milligan, an economics professor at the University of British Columbia, has run the numbers on a UBI in Canada. Assuming a monthly payment of $1,500 per month—not an extravagant figure—the total price tag would surpass $600 billion, a figure four times greater than the existing income-transfer system of $165 billion.
In Canada it’s understood that a targeted basic income is the better approach. It would be restricted to low-income people and based on need. For example, in the Ontario experiment, individuals were to receive close to $17,000 a year. For every $100 of income they earned from work, their benefit would be reduced by $50, the result being that no individual earning above $34,000 would receive basic income payments. The Ontario model was developed to be a potential substitute for traditional income assistance, such as the province’s Ontario Works program, and the income-assistance component of Ontario’s Disability Support Program. This approach would be far less expensive than a universal basic income, and come with the cost savings of replacing those old bureaucrat-heavy social programs. Again, the payments would be unconditional beyond income eligibility.
No meetings with caseworkers, no need to account for life decisions and expenses, no red tape—all mainstays of conventional income-assistance programs. “Provincial income assistance,” Forget writes, “works by taking away from recipients the ability to decide for themselves how to live their lives and how to spend their money.”
Ontario’s wasn’t the first basic income experiment, of course. In the 1970s, there were basic income projects being tested in communities throughout North America. Today, the tiny Manitoba town of Dauphin (population 8,100, virtually unchanged since the 1960s) is known around the world because of the landmark Mincome experiment that took place there from 1975 to 1978.
Forget can take credit for Dauphin’s prominence in basic-income lore. As a psychology student in Toronto in 1974 she first heard about the Mincome project from a professor, and it inspired her to change her major to economics. While the Mincome experiment took place in Winnipeg and several other Manitoba communities, Dauphin was the only location where everyone in town whose income was below a certain threshold received payments. After the experiment’s three-year run the organizers asked for additional funds to analyze the data they’d collected. However, the Manitoba Progressive Conservatives, who had come to power provincially two years earlier, denied the request and ordered the researchers to “archive the data for future analysis.” The findings were packed into eighteen hundred cardboard boxes and put aside to collect dust.
In the mid 2000s Forget set out on a quest to find that trove of data, tracking the boxes down to a regional office of Library and Archives Canada. In them she discovered not only the core labour-market surveys carried out in the 1970s but “all kinds of short surveys, letters from participants, information booklets, newspaper articles, and the kind of ephemera that gives historians a sense of the period.” (Mincome junkies will enjoy Forget’s book just for the backstory of her discovery and analysis of the data.)
The result, her 2011 paper “The Town with No Poverty,” was published in the Canadian Public Policy journal. It, and her subsequent research, helped ignite basic income’s recent revival. Drawing on historical provincial data about hospital and physician visits, she was able to compare and contrast the health of Dauphin residents during the Mincome years against a control group of similar people living in other small Manitoba towns to show the project had a profound impact on people’s lives. Hospitalizations for Dauphin residents fell 8.5 percent relative to the control group during Mincome, while visits to family doctors also declined. She also found that high school continuation rates (students moving from Grade 11 to 12) soared during Mincome to exceed even the Winnipeg rate, only to return back to the much lower level of other rural Manitoba communities after the experiment ended.
In her book, Forget builds on her Mincome findings, marshalling the available data to argue why basic income is good for your health, how women stand to benefit and what Indigenous people, immigrants, racialized groups, and young people would gain. A reader won’t catch Forget presenting basic income as a magic elixir. Forget repeatedly notes its limitations. (It won’t eliminate income inequality or put a stop to “all the growing divisions in society,” she writes. Nor can it “solve all issues related to poverty.”) Basic income can, however, balance the odds for a better life for its recipients. And it can provide a measure of insurance for even the most middle class of households for when, as Forget puts it, “life happens.”
Forget also tackles some common fears about basic income, starting with the worry that it would induce people to work less. As Forget notes, we can never know how people’s behaviour might change if a permanent, national basic income program were established. But experiments such as Mincome suggest people will not drop out of the labour force in any significant way. In Dauphin there was a decline in the hours worked by young males. But as Forget later discovered, this reflected the fact that many of those young men opted to complete high school instead—one of the greatest differentiators between a life of success versus one of hardship.
People working in unpleasant, poorly paying jobs might indeed chose to quit and look for other work, Forget explains, forcing those employers to improve working conditions and pay more. This in turn might raise prices on the goods and services they sell and drive companies to offshore more of that work to low-wage countries. “The ability of poorly paid and badly treated workers to reject demeaning work is not a problem to be solved,” Forget writes. “It is a benefit of basic income.” There’s no doubt enough in this point alone to send the more excitable elements on both the right and the left into conniptions.
Still, there will surely be a small number of individuals at the margin who do simply take the money and check out of the job market. It’s a reality that Forget strains to justify on philosophical grounds. “Some will fish all day or daydream under an apple tree,” she writes. “This decision is a difficult one for people living in industrialized countries to accept, but the great philosophers of the past recognized the importance of leisure.” (As an aside, Buckminster Fuller, too, anticipated the behaviour of the Tom Sawyers and Huck Finns of the world when he envisioned his fellowships: “If a youngster didn’t have any academic aptitude and wanted to ‘study’ fishing, he’d get a fellowship to do just that…It’s better to pay him to fish than to let him stand on a street corner…It’s also perfectly possible that he’ll come up with an important new finding about fishing.”) Forget asks us to suspend the moral judgement we apply to goofing off on the grounds that some of the best ideas in history have come to those lying under apple trees. Yet elsewhere in the book she acknowledges the danger to political support for such a program “if too many adolescents playing video games in their parents’ basements receive a cheque,” and she suggests younger recipients might need to meet certain conditions: conducting job searches, spending hours in school or volunteering. It’s a cognitive disconnect that will gnaw at readers who already find themselves sitting on the fence about basic income.
The argument does point to the proverbial elephant in the room in all discussions about basic income: the price tag. Earlier this year the Office of the Parliamentary Budget Officer released an analysis of how much a basic income for working-age Canadians modelled on the Ontario experiment would cost at the national level. The PBO did so at the request of Conservative MP Pierre Poilievre. And it provided gristle for both advocates and opponents.
The PBO arrived at a topline cost of $76 billion a year, far less than the $500- to 600-billion back-of-the-napkin estimates that had been tossed around previously, but still a staggering sum. But the bean counters also factored in the $32 billion in support the federal government spends on low-income Canadians. If that money instead went to a basic income, the net new cost to Ottawa would drop to $44 billion. Economist Jack Mintz still seized even this lower figure and warned that to cover that Ottawa “would have to more than double the GST rate to over 10 percent to pay for this.”
Forget, for her part, applies additional assumptions about cost savings. The Ontario experiment, remember, was meant as a substitute to the Ontario Works and Ontario Disability Support Program. Assuming similar social assistance spending could be replaced in other provinces, the annual price tag for a national basic income program falls to $23 billion. More assumptions—lower administration costs than current income assistance programs, reduced health care costs because of fewer visits to hospitals and doctors, etc.—would drive the cost even lower.
Many of these arguments seem reasonable enough. But together they add up to a lot of assumptions. Maybe they all come to pass. Maybe other unanticipated savings bring the cost of basic income even lower. Or, on the other hand, unanticipated costs cut into those savings. Assumptions are a flimsy branch on which to hang such a revolutionary policy, and opponents carrying the taxpayer flag will have a field day.
Forget argues Ottawa should push ahead with a small basic income to start, with a stated plan to increase it and eventually bring the provinces into the plan. If ever there were a party in power in Ottawa that might be willing to do that, it’s Justin Trudeau’s Liberals. There’s even a basic-income friendly minister in charge of the social development portfolio: Jean-Yves Duclos, a highly regarded economist, has in the past expressed interest in the scheme. And yet a basic-income advocate must despair at what she’s seen from this government so far. P.E.I.’s basic income experiment died in part because Ottawa rejected its request for funding, offering only data instead. Mayors of four Ontario cities asked Ottawa to take over the cancelled experiment but were rebuffed. And when the Trudeau government revealed its “bold” plan in August to lift 2.1 million people out of poverty by 2030, it was a rehash of already existing programs, with no new spending or policies announced.
It’s possible that Team Trudeau could be saving its basic income pitch for the 2019 election. But just consider the bruising battle Ottawa has faced on its climate change plan—another society-changing initiative that once enjoyed bipartisan support, entails higher taxes, and requires buy-in from the provinces. What started out so promising in 2016 with a pan-Canadian framework to put a price on carbon has degenerated into intergovernmental mud-slinging and a court challenge pitting Ottawa against Ontario, Saskatchewan, and Manitoba, with Alberta certain to join if the NDP lose to Jason Kenney’s United Conservative Party next spring. It’s a battle that has and will continue to cost the federal Liberals vast sums of political capital. One has a hard time imagining the Trudeau government is eager to open up another battlefront.
In her introduction, Forget states her book “is not a partisan tract.” And she mostly keeps her side of the bargain. This is an even-handed and thorough survey of what basic income can, and also importantly cannot, do. Readers are implored to consider all the evidence about basic income before making up their minds. It would be a refreshing change from the current state of affairs if politicians on all sides took Forget up on her offer.
*Due to a copy editing error, an earlier version of this story mistakenly identified AI as “assisted income” in this sentence. The LRC regrets the error.