Unemployed But Paid?
Graphic courtesy of Mike Ramsey.
The concept of a universal basic income (UBI) is one that has been around for some time- 500 hundred years to be specific. The founding father of the idea, a close friend to philosopher Sir Thomas More, mapped a comprehensive argument for it, based on notions of theology and equity. Fast forward 500 years and we are seeing a renaissance of debates examining its effectiveness as Finland, California, Ontario and the Netherlands are amidst the entities spearheading pilot projects; and now Quebec. A palpable rise in income inequality within higher-income countries has been observed since the 1980s, alongside the economic damage resulting from various global financial crises; exposing the inadequacies of the traditional welfare state. Precarious employment fueled through the rapidly expanding “gig economy” bears call for an overhaul of “the system”.
“Even those who have dissipated their fortunes in dissolute living- through gaming, harlots, excessive gluttony and gambling – should be given food, for no one should die of hunger.”
The Quebec government recently took action towards implementing a universal basic income with its freshly cultivated promises to ensure a total sum of money to those whom are unable to secure employment, for innumerable reasons. This new scheme represents a greater fragment of the $3-billion anti-poverty plan announced on December 10th, 2017. Under this newborn policy, an estimated 84,000 Quebecois (of 802,000 on welfare) currently living below the provincial poverty line of $18,000 per year, would qualify to receive a government distributed income. Those with varying disabilities, as well as single-parent households, two groups that have historically been derelict within poverty reduction schemes, would encompass a larger portion of recipients. By 2018, beneficiaries of Quebec UBI will see an increase of $73 per month to their welfare checks. This number will reach $440 per month by 2023, bringing their annual guaranteed salary to $18,029. Heikki Hiilamo, a Finnish Professor of Social Policy states that “the interest in [universal basic income] comes from the failure of the current system and recognition that it is outdated…[as] most of our social programs [were] derived from industrial society, designed to protect the average production worker, but now most people work in service sectors”.
Encouragement for the program has come from all groups lying on the political spectrum. Left-leaning supporters see it as a just alternative to the existing poverty-perpetuating social welfare structure . This new scheme could pose as a way to support the elimination of destitution and social vulnerability while closing racial and gender inequalities. In the long run, removing the stigma associated with being on government assisted programs, and shifting the discourse from a lack of skill, incentive and moral character to rather looking at the socio- economic aspects that leave one poor. Eminent free-market economist Milton Friedman has voiced his support for guaranteed national income calling it a “a negative income tax [that] provides comprehensive reform which would do more efficiently and humanely what our present welfare system does so inefficiently and inhumanely”.
Supporters on the right value this structure for its efficiency and promotion of individual liberty and limited government invention. Recipients are able to receive money and manage it as they see fitting for their life, resulting in more transparency with the use of money. To free-marketers, a UBI is preferable to market intervention measures such as minimum wage hikes. Matt Zwolinski, Founder and Director of the University of San Diego’s Center for Ethics, Economics and Public Policy affirmed that “if [one] wants to help the poor, then giving…cash is simply a much more direct and effective way of doing than forcing employers to pay people more than the market value of their labour”.
At first glance, UBI sounds like a fair and equitable welfare policy to ensure that those receiving aid can buy basic necessities. The implementation of such policy will shake up the Quebec taxation and welfare policies, with either a tax increase or reduced social program spending. This aside, there’s something to be said about incentives versus handouts. Mancur Olsen’s “Free Rider Problem” argued the effectiveness of incentives or handouts. Many have suggested that this type of program would encourage idleness, reducing the incentive to enter the workforce. Frédéric Bastiat famously said, “The state is that great fiction by which everyone tries to live at the expense of everyone else.” This is exactly why any form of welfare state is bound to fail. You cannot take from one, give to another and expect everyone’s hardships to be solved.