Time for a guaranteed income?

Hey there, time traveller!
This article was published 08/06/2016 (3465 days ago), so information in it may no longer be current.

When Expo 67 opened in Montreal in April 1967, it featured a futuristic geodesic dome. Star Trek was wowing audiences with technologies such as voice-recognition and machine-supported medical diagnostic systems. Children’s television cartoon the Jetsons imagined a future of robots and flying vehicles. In the era of the space age, the future looked promising, with the dream of increasing leisure time as robots took over the most mundane jobs and services.

In 2016, some of that has indeed happened. ATMs have replaced bank tellers. Pressing “1” has meant an end to hearing a human voice on the telephone. Swiping bar codes takes the place of cashiers. But the future isn’t bright because automation has resulted in job losses and wage stagnation that are expected to continue.

Which is why discussions about a guaranteed annual income (GAI) seem to be more animated. GAI is fairly self-explanatory; individuals receive a basic amount of money, whether they work or not. That amount is reduced as the individual’s paid wages go up, until it is eventually stopped. It would replace other social programs such as welfare and subsidized housing, and alleviate the need for the bureaucratic networks those programs bring with them.

It’s not a particularly new idea. The Manitoba basic annual income experiment — Mincome — was implemented in Dauphin, Winnipeg and some rural communities in Manitoba in the 1970s. Some say it was quite successful, with researchers pointing to higher educational outcomes and lower hospitalization rates. People did not stop working all together because the income was too low to actually survive on, but to quote University of Manitoba economist Evelyn Forget, the income “was enough to add some cream to the coffee.”

Other economists have been less positive, suggesting that since the program only ran for three years, it’s difficult to determine its long-term effects. As well, as U of M economist Gregory Mason has argued, it’s very expensive. Still others point to increased saving in the implementation of welfare, health care and other social programs. There is never an easy answer in economics.

Earlier this week, Swiss voters rejected a proposal to implement a guaranteed annual income. The Dutch have a pilot project about to take off in January 2017, and the Finnish are also examining the long-term effects of the policy. Perhaps it’s time Canada did the same.

In Manitoba, the Conservatives took positive steps toward improving the prospects for low-income earners by increasing the basic personal income tax exemption on Jan. 1, 2017, which will remove 2,770 low-income earners from the tax rolls. However, at the same time, the budget released last month ruled out a minimum wage increase. Steps forward, steps back.

Poverty is still an issue in this province, with the highest child poverty rate in the country. Many come from single-parent families. Many are indigenous. What will their futures be like as jobs disappear?

The gap between rich and poor appears to be widening. While layoffs were the norm in the oil and gas industry last year, the CEO of Encana did very well, earning $112 million. He joins many of the country’s 100 highest-paid chief executive officers who saw their compensation increase in 2015. One executive — Michael Pearson, the former CEO of Valeant Pharmaceuticals — saw his remuneration increase by a whopping 1,512 per cent to $182 million. By comparison, the average Canadian income for 2013 was around $47,358, which has remained pretty static since the 1980s.

It’s time for a rethink in Canada that breaks the cycle of poverty and ensures the middle class isn’t stuck with the bill. Despite best attempts by government and social policy experts, we can’t seem to find a way to make poverty history. Perhaps GAI is the route to go.