Report shows steep cost of guaranteed basic income.
Two years ago the government of b.c., then dependent on a New democratic parliamentary coalition with the Greens, commissioned an expert report into the possibility of a basic guaranteed income for residents of the province. This was a gesture toward meeting a Green demand for basic-income research. If you go back and look at the public confidence-and-supply agreement the parties signed, it specifically requires that b.c. “design and implement a basic income pilot” and fund it in the Ndp’s first budget.
We have since all seen how little the text of the b.c. orange-green pact counted for when it came to electoral reform. And, of course, the New democrats have since gained a clear majority through a snap election — one that the text of the pact obligated them not to call. It turns out that, having broken the agreement, Premier John Horgan was no longer bound by it.
If you wondered why supply-and-confidence arrangements in legislatures with no majority usually don’t involve an extensive written contract of this nature, you can now just go ask the b.c. Greens. The pact, when signed by Horgan and Green leader Andrew Weaver — who has since fled electoral politics, desperately trying to scrub off its cynical stench as he ran — was hailed as a momentous evolutionary step in West-minsterian government-formation. Sometimes evolution goes down a dead end.
Albeit a fertile one! because the NDP, although it never got around to performing an actual basic-income experiment, did throw enormous resources at basic-income research. The report was published Thursday, and it is surely worth whatever they spent.
It is a state-of-the-art study of basic income, in all its many varieties, that devotes attention to everything from the underlying ethical principles to the effects on labour and the public treasury. Government microdata normally unavailable to scholars went into its preparation. The lead authors are economists of high reputation and they were supported by the efforts of literally hundreds of others. The report will inform the discussion of basic income dreams worldwide for years. Almost every paragraph contains valuable insights into the question.
Which is to say that it defies the ability of even a preternaturally gifted and hard-working newspaper columnist to fully absorb in one day. but some radical Greens won’t be too happy with the report, even if the rest of us must thank them for its existence. Most of the day-one news reports are naturally focusing on the headline finding of the study that a fully universal basic income — some periodic amount sent to every household or individual by the state, unconditionally — is an inefficient and impractical way of alleviating poverty.
you’re reading the National Post, so this is probably what you already thought. but the critique of ubi is ground to a sharpness here that even kooky ubi fans won’t be able to dismiss easily. When a true ubi is compared to alternatives involving income-tested tax credits or negative income taxes, the likely reduction in poverty is much greater, dollar for dollar of
expenditure, with the alternatives.
The hypothetical compensating advantage for a ubi is that, since it goes to everyone without regard to their other forms of income, it wouldn’t discourage paid work by imposing a “welfare wall” at some particular level of income. Great: except how do you pay for it? The report estimates that you could in fact eliminate poverty in b.c., by a statistical definition, with a $20,000 ubi for working-age people. This would cost $51 billion a year, “which is roughly the same order of magnitude as the b.c. budget.”
This means higher taxes; you could start down the road to the $51 billion by effectively eliminating the personal exemption from income tax, but, oops, you have just erected a huge “welfare wall” for everybody who reaches the poverty line. you could try to get there by eliminating social programs that were no longer necessary with a ubi, but on close inspection — and the study does perform one — most of the existing ones of any size would still be necessary in ubi World. The devil is in the details, which has allowed ubi supporters to get away with playing three-card monte in the debate; this report pins things down and shows that “welfare walls” are inevitable whether or not the design of a basic income targets the vulnerable.
Only a fraction of the report is devoted to ubi-debunking, with a page or so explaining why the experimental pilot that was originally demanded shouldn’t happen. The authors devote the remainder of the space to showing how reforms to the existing buffet of social programs, along with better integration among them, could achieve a lot of the desired effects of the ubi (many “welfare walls” just need a gentle push) and could, in fact, go quite a way to extinguishing poverty affordably.
The overall effect is to provide a defence, one of unexpected power, of the unloved welfare state as it already exists. (I’m not what you’d call a huge fan, and it had this effect on me.) What you get when you work upward from first principles of humanitarianism and arithmetic ends up being, not turbo-communism with an acronym, but an awkward buffet of specific programs for target populations such as children, seniors, the poor, the homeless, the disabled, disadvantaged young adults, and victims of domestic violence. As ever, there is usually a good reason or two why the world looks the way it happens to.
THE LEAD AUTHORS ARE ECONOMISTS OF HIGH REPUTATION.