OLD IDEA ARE BORN IN UNLIKELY PLACE

Alberta ponders guaranteed annual income

With its economy tethered to oil prices, Alberta is known for unconventional, even experimental economic policy.

When he was Alberta’s finance minister, Stockwell Day implemented Canada’s only flat tax. Ralph Bucks, also called “prosperity bonuses,” redistributed a massive temporary surplus through payouts to citizens, while also respecting the province’s value of freedom from government bureaucracy.

Now, with oil prices in the tank and the NDP holding a new majority, a new experiment may be in the works.

A guaranteed minimum income, known as a mincome, has long been a pipe dream of economists across the political spectrum, but especially leftwing anti-poverty activists, people like Joe Ceci, a former Calgary alderman who was a star NDP candidate — and is Alberta’s new finance minister.

The idea of traditionally conservative Alberta as a testing ground for a left-wing social policy might seem strange, but it has increasing support.

“The frustrating thing is that we know what the answers are,” Calgary Mayor Naheed Nenshi told the National Poverty Reduction Summit last month, referring to the idea of negative taxation, which is one way to create a guaranteed minimum income. More recently, he told reporters he hopes Ceci will be bold.

“I am really, really interested if he will bring that to bear in terms of some really significant changes to the taxation system that would really help us manage poverty in a brand new way,” Nenshi said.

Edmonton’s mayor, Don Iveson, has likewise indicated that Alberta’s two major urban hubs would be willing to host pilot programs to evaluate the consequences of guaranteeing income to adults, whether the social benefits outweigh the possibility of exploitation.

Canada has been a leader in this kind of experimenting, but it has been four decades since the last large-scale effort, when everyone in Dauphin, Man., was guaranteed a minimum income as a test case.

The program ended without an official final analysis, but Evelyn Forget, an economist at the University of Manitoba, did her own analysis and found minor decreases in work effort but larger benefits on various social indicators, from hospitalizations to educational attainment.

“These results would seem to suggest that a guaranteed annual income, implemented broadly in society, may improve health and social outcomes at the community level,” she wrote.

Mincome is an idea that has had many champions over the ages, but few pioneers.

American founding father Thomas Paine, in an idea later echoed by Napoleon Bonaparte, argued that because everyone is entitled to share in general prosperity, states should pay citizens a bonus, perhaps on their 21st birthday, which would minimize the “invidious distinctions” between rich and poor.

Milton Friedman, the American icon of free market economics, liked the idea of simplifying welfare with a guaranteed minimum income and a flat tax, and argued for it in his book Capitalism and Freedom.

In the U.S., parallel experiments to the Dauphin one, aimed at measuring labour market reactions, were overseen in the 1970s, curiously, by Donald Rumsfeld, who headed Richard Nixon’s poverty program with his aide Dick Cheney. But nothing was ever put into wide practice.

In Canada, ill-fated Progressive Conservative leader Robert Stanfield was a booster, as is former Tory senator Hugh Segal, and parliamentary committees have recommended it various times, from 1971 to 2009.

A mincome is most associated with the modern left, though, as a way to eliminate the welfare trap. François Blais, for example, the Quebec MNA and former employment minister, wrote a book on it called Ending Poverty: A Basic Income for All Canadians.

In a 2011 report for the Conference Board of Canada, Glen Hodgson called it a big idea whose time has yet to arrive, and advocated it as an alternative to the mishmash of social programs, for “solid economic, fiscal and social reasons.”

Federal Liberals have resolved to study it in a federal pilot project, and P.E.I.’s new premier has offered to host one.

But it is Alberta that has the momentum and, increasingly, the political will to bring a mincome to reality.

It is unlikely to be an easy task, though. There are dangers and criticisms for the idea, often articulated from the political right.

As The Economist magazine described it last month, in discussing a similar Swiss proposal, a “generous basic income funded by very high taxes would be self-defeating, as it would reintroduce the sort of distortions that many of its advocates hope to banish from the welfare system.

‘‘Loafers could live comfortably without lifting a finger.”