Topic
Doing so for all Canadians could almost erase poverty, or dry up labour sources, depending on whom you ask.
'People like working' even when guaranteed a base income for no work, but will they work enough? asks Krishna Pendakur, an SFU economist who focuses on anti-poverty measures.
Fair wages bring equality to workers. But what is fair? And what about people who can't work? First in a Tyee Solutions Society series on tackling poverty.
Which party deserves your nod? The NDP and Liberals have made explicit promises. Conservatives have not.
Richmond rejects call for 50 per cent raise.
British Columbia's lowest-paid workers finally got a raise last spring, with the first increase to the province's minimum wage in 11 years. But even with that hike, full-time workers earning B.C.'s minimum wage of $10.25 an hour don't take home enough to meet Statistics Canada's equivalent of a poverty line for families.
When it comes to countering poverty, economists and social policy groups have no shortage of ideas (See "A Glossary of Anti-Poverty Policies" that runs as a sidebar.)
For the Tyee Solutions Society, I've been checking out three of the most widely advocated. Part one of this series looked at the living wage; a future installment examines government wage subsidies.
Today, the contrarian case that a guaranteed annual income -- what some might call that economic phantom, the "free lunch" -- might just be the most cost-effective way to end poverty.
Shackled by 'deserving poor' notion?
Your parents probably told you, "Money doesn't grow on trees." Unfortunately they were right. But what if we made it easier for low-income people to cover basic needs by giving them money?
It's not such a far out idea: Alberta did something like it in 2006, when every man, woman, and child in the province received $400 from oil revenues. Alaska has been doing the same since 1982.
The purest form of giving away money this way is a guaranteed annual income (GAI): a payment from the government to its citizens simply for being citizens. It can be taxable or non-taxable, meted once or on a continual basis, monthly or annually.
Whatever the method, some anti-poverty advocates believe a GAI is essential to a comprehensive strategy for reducing poverty because it offers extra income, no strings attached. For a low-income person it can mean the difference between having to choose between rent and food -- or having enough money for both.
"We think that all Canadians deserve to have a basic standard of living just because they're Canadian. They don't have to be 'deserving' poor," says Donald Benham, director of public education at Winnipeg Harvest, a food bank distribution centre in Winnipeg, MB, which endorses a GAI. "We all believe in helping each other, and we think there should be a basic level [of income]."
Some economists disagree. They argue a guaranteed income could remove our incentive to work, increasing dependence on government-funded programs. The solution to our poverty problems, as they see it, could be the beginning of a labour crisis.
According to a report by Evelyn Forget at the University of Manitoba, the idea behind a GAI was born out of the civil rights movement in the 1960s. But its roots go back much further.
Over 200 years ago, American revolutionary Thomas Paine is said to have proposed a one-time payment to all American citizens simply for being American. French Emperor Napoleon Bonaparte's statement that, "man is entitled by birthright to a share of the Earth's produce sufficient to fill the needs of his existence," is often interpreted as endorsing a guaranteed income, though he did not introduce one.
In 1962, American economist Milton Friedman, popular among free-market followers, proposed a negative income tax and a flat tax to create a guaranteed annual income. Everyone would be required to file an income tax return, but those who fell below a specific income line would receive money to raise them to that line. Every dollar of earned income would reduce the benefit.
During the early 1970s several Canadian provincial and federal committees, including the Special Senate Committee on Poverty and Quebec's Castonguay Nepveu Commission, recommended a GAI to reduce poverty.
But neither U.S. nor Canadian governments were prepared to adopt such risky programs without testing them first.
"There was widespread interest across North America in 'rationalizing' income support programs, but also concern that good programs would lead people to reduce their work effort," Forget told The Solutions Society.
"[In the early 1970s] four experiments in the U.S. were providing data, but Canada wanted its own data. GAI was an interest of the Liberals in Ottawa and the [NDP] government in Manitoba."
With a cost projection of $17 million, Manitoba secured Ottawa's commitment to foot that majority of the bill for simultaneous projects in Winnipeg and Dauphin, dubbed MINCOME.
The Dauphin study is of particular interest to Forget because it was the only one where non-workers -- the elderly, unemployed, and disabled -- were also included.
An agriculture community with a population of about 12,500 including the surrounding rural area, everyone in Dauphin was eligible to receive 60 per cent of the low-income cut-off line for a family their size. Families with no source of income received the full amount. For those with an income source, every dollar of earned income reduced the GAI by 50 cents.
GAI creates healthier people: Forget
When you ask Canadian economists and social policy academics about this, they inevitably mention the MINCOME experiment. For a period in the 1970s, it paid every poor person living in Dauphin, MB, enough extra money for their incomes to reach at least 60 per cent of the low-income cut-off line (see sidebar).
Supported by the federal and Manitoba governments, MINCOME ran from 1974 until 1978, but only two years worth of labour data was collected from the test project. By the time it finished, public and political support for a GAI had waned. The data gathered dust until Evelyn Forget, a community health sciences researcher at the University of Manitoba, gained access to it in 2009.
"I've always been interested [in MINCOME] and knew little work had been done. I wondered whether the database I had access to might give us some answers," Forget explained in an email to The Solutions Society.
"We know that poverty is one of the biggest health risks. If we can address poverty, can we improve health outcomes and reduce costs?"
What Forget found was a significant decrease in the number of hospital visits during those years, especially for accidents, injuries, and mental health issues. Among two groups, access to a guaranteed income did reduce employment. Teenagers stayed in school longer instead of leaving to get work. And young mothers stopped working while receiving MINCOME benefits to care for small children.
They were the only two groups that stopped earning an income; and in both cases that decision may have paid social benefits later. Furthering teenagers' education may have qualified them for higher paying jobs after graduation. Mothers staying home cut down on childcare costs.
The findings are enough for Forget to endorse a GAI for Canada today: "I think that social programs have changed a great deal since the 1970s, so the GAI program would need to be re-designed, but the principles are still valid."
Forget says a living wage, an idea described in my first report in this series, puts unfair financial pressure on small businesses, or increases what they demand from low-skilled employers. But a GAI can work in conjunction with a minimum wage to increase people's income without penalizing small employers.
"A GAI supplements low wages without interfering in the market," Forget argues. "Small firms can hire unproductive people and pay low wages because that's all their labour is worth. But the GAI would ensure that [an] individual receives enough to live on. Minimum wage legislation still needs to be in place so people aren't exploited, but there is no need to ensure that the legislated minimum wage is enough to live and support children on."
Raising the base
For Benham and Winnipeg Harvest, a GAI is needed to ensure that every Canadian experiences a basic standard of living that meets their basic needs.
But unlike the MINCOME project, which in today's numbers would see a family of three in Winnipeg receive top-up payments to reach an annual income level of at least $17,058, Winnipeg Harvest has devised its own needs-based measure. After interviewing low-income people in Winnipeg who use food banks, Harvest released a report finding that an equivalent family of three today would really need a base income of at least $38,000 per year to make ends meet.
"That's about twice as much as what you get on welfare," says Benham. "Welfare is completely and utterly inadequate for feeding and sheltering and clothing a family of three in Winnipeg right now. That's what this report shows beyond a shadow of a doubt."
That might seem like a tall order for a province that has nudged up welfare rates by only a miserly $84 in 20 years. But Benham says it has the support of the Manitoba Chamber of Commerce, which would like to see low-income people become customers.
Economic jargon is hard enough to penetrate without encountering multiple names for the same ideas. Here is a glossary of terms to help cut through the economese.
Living Wage: an hourly wage that covers the essential costs of food, clothing, housing, healthcare, transportation, education, childcare and incidentals in the region where it applies.
Minimum Wage: the lowest hourly wage you are legally allowed to pay a worker in a jurisdiction like British Columbia. An exception in B.C. is the $6 "training wage" for new employees going through orientation.
Guaranteed Annual Income (GAI): A base income guaranteed to all residents of a country, regardless of employment status, and provided by the state to those who do not earn it in the labour market.
Other ways we do, have, or might support low-income Canadians:
Past:
Family Allowance: Beginning in 1945, the federal government sent a monthly cheque to the parents of every Canadian child to help with the cost of their care. Canada's first universal social program, it lasted for 33 years until a Liberal federal government replaced it with a selective tax credit in 1978.
MINCOME: A pilot project in Dauphin and Winnipeg, Manitoba, that provided a guaranteed annual income to people there from 1974-1978. Funded jointly by the federal and Manitoba governments. Only a select few Winnipeg workers received the benefit, but it was open to both working and non-working individuals in Dauphin.
Self-Sufficiency Project (SSP): A federal pilot project for a never-instituted national wage subsidy to keep single parents working and off welfare. Ran in British Columbia and New Brunswick for a decade starting in the early 1990s.
Present:
Guaranteed Annual Income Supplement: A federally issued income supplement that tops up the annual income of retired Canadian seniors. Calculated based on their accumulated lifetime earnings.
Universal Child Care Benefit: federal payments of $100 per month per child paid to Canadian families with children under the age of six. Intended to supplement childcare costs. Descendent of the Family Allowance program, Canada's first universal social welfare program, which gave all Canadian mothers a monthly, tax-free benefit from 1945 to 1973. Except in Quebec, where the cheque was issued to fathers.
Working Income Tax Benefit (WITB): A national federal government wage subsidy program for Canada's low-income workers. Workers typically apply via income tax returns, but there is a separate "advanced payment" form if tax returns are too far in the future. Cheques are issued four times per year.
Earned Income Tax Credit: A federal government wage subsidy program for American low-income working families. Unlike the WITB, which is open to individuals, recipients of the Earned Income Tax Credit must have children under 18.
Canada Child Tax Benefit: a monthly tax benefit paid to families with children under 18, regardless of parents' working status. Benefits are usually issued around the 20th of each month, from July to June. Benefits can be paid in one lump sum if under $240 annually. The benefit is clawed back based on the amount of income a family makes.
Envisioned:
Negative Income Tax: a way to guarantee annual income by paying a "negative" tax to people earning below a minimum amount. Payments decline the closer a recipient comes to the guaranteed income through their own means. Anyone who earns more than the base amount does not receive money, and pays taxes instead.
Universal Demogrant: another way to pay a guaranteed annual income where everyone, regardless of income or employment status, receives the same payment (the Family Allowance was a type of demogrant since all parents, rich or poor, received it).
Wage Subsidies: government payments to subsidize work-related income. Can be delivered as tax benefits like the existing Working Income Tax Benefit, or be added onto pay cheques at an hourly rate.
"Their members know exactly who [low-income people] are: 'these people never buy anything from me because they're on welfare.' If you just increase the shelter benefit enough so they can pay their rent and have money for food, then maybe they'd have enough extra money to spend on a bicycle for their kid," he explains.
GAI has other supporters in high places, too. Senators Art Eggleton (Liberal) and Hugh Segal (Conservative) led the Standing Senate Committee on Social Affairs, Science and Technology's research into poverty, housing and homelessness in 2009. The committee's report urged the federal government to "publish a Green Paper by 31 December, 2010, to include the costs and benefits of current practices with respect to income supports and of options to reduce and eliminate poverty, including a basic annual income based on a negative income tax [emphasis added]."
The government has since produced a green paper on retirement incomes, including the Guaranteed Annual Income Supplement given to retirees based on their lifetime earnings. But no green paper has appeared on reducing or eliminating poverty.
Creating economic, environmental sustainability
There's more to a GAI than boosting the economy by creating more shoppers or making life easier for the poor. Pursued far enough, it might also save the environment.
As Jim Mulvale sees it, the GAI's supposed Achilles' heel (it kills the urge to work) is really a silver lining: the more money we earn through a GAI the less we work, true. But the less we work, the slower our economic development and the more sustainable our society becomes.
"Historically, liberal democratic societies with advanced welfare states have relied on economic growth [and] rising tax revenues to meet rising social-service expenses for growing populations," observes Mulvale, an associate dean of social work at the University of Regina. "From an ecological point of view, we just can't go on supporting open-ended economic growth.
"We have to be thinking about moving towards true, genuine economic sustainability, which probably means a no-growth society, which probably means redistribution as opposed to a growing pie of which we've all got a larger slice."
Mulvale wants a negative income tax, which would provide basic income to any household that fell below a certain income threshold, the same model used for MINCOME (in contrast to the universal "demo-grant" model, where everyone, regardless of income level, receives the same amount of money).
Social policy triumvirate
Canada already has some GAI programs, like the Guaranteed Annual Income Supplement for seniors, the Universal Child Care Benefit, and the Canada Child Tax Benefit. Colin Busby, a senior policy analyst with the C.D. Howe Institute, says we have research into GAIs like MINCOME to thank for these policies.
But there is a delicate balance to achieving successful GAI programs, he warns. And governments have been struggling to create sizable benefits for low-income individuals, with low claw-back rates that government can afford.
"It's very difficult to have a large transfer to low-income individuals with low claw-back rates," says Busby. "The claw-back rates are important because they influence the behaviour of individuals in labour markets.
"You're taking about a very large government expense. Whatever it is you decide to do, you come across some difficult questions."
Krishna Pendakur, an economist and professor at Simon Fraser University, agrees with Busby's view on claw-backs. He also says a negative income tax could have a negative effect on the amount of work people do.
"You don't want to measure the number of people who drop out of work. You want to measure the hours [worked] response. People like working; it makes them feel like they're doing something right. You would not expect people to just drop out completely," he says.
The MINCOME data doesn't provide the information to dispute Pendakur. "No research was done on work effort in Dauphin. Some was done on the Winnipeg sample. People who worked full time made few changes to their work effort," says Forget.
Similar studies in America, however, found an overall 13 per cent reduction in work effort from families as a whole, with less effort coming from secondary and tertiary earners. This allowed many women the chance to take longer maternity leave than would have been previously possible.
Changing public policy is 'slow': Benham
Winnipeg Harvest has been meeting with Manitoba politicians since their first report on appropriate incomes came out in 1997. Politicians frequently agree that a GAI is a good idea. But, they say, it's out of their hands.
"We've had cabinet ministers say to us, 'Well, this might be the right thing to do, but it's not politically popular. What Winnipeg Harvest needs to do is mobilize the masses. Get everyone convinced that we need to do this, so that it becomes politically easier,'" says Benham.
Winnipeg Harvest has been trying. Along with the Winnipeg Social Planning Council they've started a Raise the Rates campaign to increase welfare rates; they organized a march on the legislature; they've run op-eds in local papers and made speeches pleading their case in public.
"It didn't work," Benham laughs. "It's a slow business changing public policy."
Mulvale, who calls himself a "social policy pragmatist," believes a GAI won't happen in the short-term. He says most people will be relying on a labour market income for the majority of their working lives. He also notes the federal budget 2012 decision to delay payment of the Old Age Security / Guaranteed Income Supplement program until workers are 67 means government is moving away from a guaranteed income, not closer to one.
The only federal party that's shown enough interest in a GAI to include it in their platform is the Green Party. But Mulvale sees benefits in a GAI that all parties would endorse.
"[In] societies where there's a relatively small gap between the wealthy and the poor, health outcomes improve, there's lower infant mortality, crime tends to be less, people complete school more often. And living in a society where the quality of life is protected through those good social outcomes, that benefits the wealthy as well as the middle class and the poor," he says.
With one central program to produce GAI cheques, there wouldn't be any need for provincial programs like welfare or child benefits. Money from those programs could be funneled into a GAI program for all Canadians. It would incur less overhead cost than delivering separate programs that vary in adequacy from province to province, town to town.
As Mulvale and Benham see it, much of the federal government's money shuffling -- cutting programs in favour of decreasing the deficit--would not be necessary with a GAI. But thinking for the long-term is a difficult sell for politicians hoping to be reelected in three years. ![[Tyee]](http://thetyee.cachefly.net/ui/img/ico_fishie.png){kind=small}
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judycross
1 year ago
Not until the Banksters get kicked out
We need to go back to 1974, before the Bank of Canada stopped creating +- 20% of the money supply using it to fund health care and public works with almost interest free money.
The combination of government borrowing money from private banks and a minimum income would lead nowhere but to more debt.
First things first. Get Goldman Squid out of our Bank of Canada and take power back from Banksters.
lindi6676
1 year ago
Judy I agree!!!
Here is a twelve year old Canadian girl thats gets the Canadian banking system...listen to Victoria Grants speech on banking. http://www.youtube.com/watch?feature=player_embedded&v=Bx5Sc3vWefE
When we finally cut loose from the private banks Canada will have more money for social programs etc , it will reduce our taxes and its a win win for all...time for political change. I think Victoria is our future Prime Minister or a leader in some form.
Carolyn.E
1 year ago
ADEQUATE INCOME = ADEQUATE SUPPORTS = FULL PARTCIPATION
Green Party shows interest? Of course, they are not a real party.
Guaranteeing an annual income was be placed alongside guaranteeing people the right to be educated, to be adequately housed, and that adequate childcare services be available. Income cannot be separated from services otherwise you set up a system where one's participation in society is not valued. We want all members of our society to have a place and be valued. THERE IS A FULL PACKAGE. not a one shot approach.
rantnic
1 year ago
AMONG THE POOREST
Here in Canada, the richest country in the world, here in B.C. the richest province in Canada, we have a huge population of desperately poor people.
That we have so many poor, so many hungry, homeless, unemployed and so many in need of food banks it is indeed a crime.
Blame first the politicians who's policies and practices have created this situation. They are politicians so we know better than to believe them when they say "don't blame me", "it's not my fault". It bloody well is their fault and they should be jailed for the amount of misery that they have foisted onto the poor, marginal and handicapped members of our society.
Just listen to them say "how about them Canucks eh", while they steal the money out of your pocket. Remember when most of us had enough portable income that we could be generous, we gave to the food banks, we tossed change into the beggars hat and we donated freely to a variety of causes, because we could afford to.
If I could afford a yard arm I would have something to hang those useless politico's from.
Alan MacKinnon
Fiat lux
1 year ago
By law only governments can
By law only governments can "create" money and all money, even "created" by private banks from the air, belongs to the country, or public.
This public ownership of the money is proven and shown, written on every banknote and also applies to all the computer figures money that does not exist in any solid form.
Governments have given the right to private banks to "create" money from the air, then assume the responsibility to supply resources to maintain the value of that imaginary money, and then top off the idiocy by borrowing back and paying interests on the money the government and the public already owns.
Absolutely brilliant, praiseworthy and logical "conservative" thinking that could only have been invented by so called "economists."
As far the guaranteed annual income is concerned, to the best of my recollection, may have it in writing somewhere, even one of the patron saints of modern capitalism, Milton Friedman may have advocated it.
The problem is that we don't have any legal and logical definition of what "work" really means and have replaced the whole concept with the word "jobs", meaning that somebody has to hire and pay somebody, or else, it isn't GDP.
At our ages we have retired and have been receiving OAP and Canada Pension for 20 years, but we've also been working 7 days a week on various projects for ourselves and others, theoretically worth a million bucks, but it doesn't appear in the books, because we didn't receive any payments, so it doesn't exist.
Right now we're working on a major art exhibit for the Station House Gallery in Williams Lake in Sept. when all our paintings will be donated to the gallery as fund raising.
Our expenses are paid for by our OAPs, therefore wasted in "conservative" eyes, because nothing is showing in the GDP, therefore doesn't exist.
When we think back on the totally worthless, stupid projects we've been working and wasting our lives on in our business years, wasting materials and labour on fashionable junk,we could cry. Bu it was all GDP so A-OK.
When a mother looks after her family, kids and house, that's not GDP and not a "job". She should commute 1 1/2 hours every day to a "job" and pay daycare for her kids, that would be "growth" and GDP, making any good economist jump with joy.
I'm wondering when our great "economist" PM will deindex our OAPs, already suggested by Mulroney until an old lady called him a liar in front of cameras?
Mulroney backed off, but Harper is a maniac and he won't. After all, when we have no "jobs" we're not contributing to the GDP, even if we produce just as much as before, but no imaginary money changes hands, and so we might as well drop dead...and the sooner the better, for the sake of "economic efficiency", so our funeral costs can raise the GDP.
Ed Deak.
jimmmmy
1 year ago
Trudeau
A guaranteed income was one of Trudeaus "sins" like the NEP. He pushed this idea for years and took a lot of "stick" for it. the most effective of which was from his own party. Nothing new in this idea. Because of almost 50 years of conservative social engineering this idea now appears radical, and most of this generation don't like it.
Perry
1 year ago
Criminal negligence by politicians
Rantnic said: "That we have so many poor, so many hungry, homeless, unemployed and so many in need of food banks it is indeed a crime. Blame first the politicians who's policies and practices have created this situation."
Criminal Code of Canada - Criminal negligence
219. (1) Every one is criminally negligent who
(a) in doing anything, or
(b) in omitting to do anything that it is his duty to do,
shows wanton or reckless disregard for the lives or safety of other persons.
Definition of “duty”
(2) For the purposes of this section, “duty” means a duty imposed by law.
Causing death by criminal negligence
220. Every person who by criminal negligence causes death to another person is guilty of an indictable offence and liable
(a) where a firearm is used in the commission of the offence, to imprisonment for life and to a minimum punishment of imprisonment for a term of four years; and
(b) in any other case, to imprisonment for life.
Causing bodily harm by criminal negligence
221. Every one who by criminal negligence causes bodily harm to another person is guilty of an indictable offence and liable to imprisonment for a term not exceeding ten years.
Kreditanstalt
1 year ago
It's more "redistibution". You never said...
How do you plan to fund it?
TAX/STEAL more from "the corporations" and "the rich" and sink the entire economy, competitiveness, jobs AND business startups?
PRINT more, sinking the dollar, sending inflation soaring and in effect stealing purchasing power from all of us?
BORROW more, destroying creditworthiness & raising bond yields resulting in even higher government deficits and a lower dollar - again hitting ALL of us?
Or magic unicorns, lollipops, rainbows and pixie-horses can "create" "money" somehow, somewhere...somehow...somewhere...
freebear
1 year ago
The money makers are afraid
that a GAI would allow people to do nothing, or volunteer, or not work hard.
Throw in legalalized marijuana and Capitalism and Conflict may be replaced by Fair Trade and Peace!
Fiat lux
1 year ago
Kredit....You may not have
Kredit....You may not have noticed it, but it is the private banks who "PRINT more,sinking the dollar" for the mega corporations to take control of the world.
Why do you think we have an over 1000% inflation in the past 30 years? Because of the hated unions? Let's hear the "conservative" explanation. Did they get 1,000 % raises ?
Who deregulated the banks to print unlimited amounts of money? The NDP, or the unions ? Are they printing, or not even printing just inventing it as computer figures, for the hated "unions" or for "welfare", or for the multimillion salaries of executives ?
We go shopping every twice a month and I bet you my life that prices will be higher in Jimmy's store, when we go on Thursday, up from a couple of weeks ago.
Have his part timer, no benefit employees got any raises as the excuse. Or his his shareholders ? Of course he doesn't have any, but needs the money very badly.
So, why are the prices rising every day, when the public sees no benefits, but gets poorer ?
Ed Deak.
jimmmmy
1 year ago
KREDIT
Competitiveness in Canada is a buzz word meaning government franchise. I very much doubt if you could really compete if stripped of your govrnment Aegis. Guys like me would kill and eat you. YOU sound like Fred Nietzsche trumpeting "will" while in life he was a small frightened man who was in love with his sister. Lighten up a bit.
Fiat lux
1 year ago
Come to think of it, I seem
Come to think of it, I seem to remember that I was paying my guys about $12 or $15/hr when I quit in Vancouver in 1979.
If wages had risen the same percentages as the cost of living, cost of housing,etc. workers would have to be getting $100 to 150/hr. now, not to mention union carpenters at over $200/hr.
So what are those hated workers getting now, stealing money from "investors" ?
Who deregulated the banks ? Those goddamn
socialists Reagan and Mulroney, of course, to please their unionist friends.
Ed Deak.
Kreditanstalt
1 year ago
Ed,
You're putting words in my mouth again.
I never said "workers were stealing money from investors". I only mean that all businesses are in business to make a profit and that any profits belong, rightly, to the businessowners. What's the point of paying your workers 10x as much - $150/hour - if prices also rise 10x?
Banks? You're right in that THEY are "printing money" - credit money. No different from a government doing the same...
There can be no real solution to the problems of sinking living standards, runaway inflation and low economic growth until the Bank of Canada is closed, legal tender laws abolished, 100% reserve banking instituted and the right to define "money" returned to the individual...
Ed Seedhouse
1 year ago
A government sovereign in
A government sovereign in it's own currency can always pay any debt denominated in that currency and can always purchase anything for sale in that currency.
Money does not grow on trees, it is created out of thin air. When a bank loans you money it does not deduct that money from it's reserves nor from it's customer's accounts. It simply creates an accounting entry that says "you have this much money in your account with us, and by the way, you also owe us this much money"
The Canadian government does not have to tax to spend and in point of fact it never uses the taxes it collects for spending.
The taxes you pay serve the single purpose of giving the government issued fiat currency a value. The taxes that are collected by government simply disappear, and the money it spends is created out of thin air, by a simple double accounting book entry.
Even Milton Friedman understood this, and the economist we lefty's so love to hate supported the guaranteed annual income, in fact I believe he came up with the idea in the first place, though I might be wrong about that. So, far from being some left wing idea, the G.I.A. is actually a right wing idea, and one of their few actually good ones.
dave0ferg
1 year ago
GAI could save $$$
One of the popular arguments against GAI is that ‘those people’ would quit their jobs and ‘do nothing.’ I would counter that ‘those people’ in the work force contribute little, nothing or even interfere with those who are productive and the work force would be much better off without them. I don’t have the skills to do the math, but I opine that the increased productivity of a smaller work-force would pay for GAI with a big profit.
hg
1 year ago
Money supply
After reading all this, I am more confused than ever. I always thought, you had to have money to lend money, apparently not so. To my way of thinking, there is only one way out of this mess, and that is the gold standard.
freewilly
1 year ago
a new cruel world
"The problem is that we don't have any legal and logical definition of what "work" really means"
Ed makes a good point. Even the under employed work. In our small community almost everyone works and many of our services are filled by volunteers. Fire department ambulance, we take care of our %^$#@ and government does little to nothing to help.We create societies, groups to enrich the community with no outside help.
We work. We also take care of business, we are all business people. Living day to day is a fricken business.
30 or 40 years ago the idea of a guaranteed income (GAI) was popular, but so was turning Telus (BCtel) into a crown corporation, by even some conservtives, jeez have times changed. Its a race to the bottom , cheap products, low wages etc... an underground workforce of basically slaves. Yeh lets bring back slavery.
Leonard Cohen's son was on CBC today and almost as bright as his father, commented on the state of culture. Telling a story of someone robbing his Volvo taking his baby basket and leaving his collection of valuable music. Funny how things have changed Ive had my vehicle pilfered for tapes and cds on several occaisons.Now the crooks are too stupid to know what has real value.
What happened to this country? Was it too much Television or a systematic and calculated plan by gangsters to ripoff Canada. I figure some crazy physicist has been playing around with time and space Kinda like that show Fringe, weve been thrown into a hard assed cruel reality that has no similarity to the world I was initially born into. Thats my theory, cant quite buy into Ed's.
judycross
1 year ago
Banks create money as debt
It wasn't Mulroney/Reagan who switched to the government borrowing money from the commercial banks, it was Turner/Nixon under Trudeau! Trudeau was probably wearing a red rose in his lapel when he said he knew nothing about economics and didn't care about it either! David Lewis did a misdirect with his wonderful phrase, "corporate welfare bums".
To paraphrase Gore Vidal, Right or Left, they are both wings of the same bird of prey.
Until one of the mainstream parties declares their support for taking back the money creation function of the Bank of Canada, they are all to be viewed with suspicion.
John Corman
1 year ago
Ed Seedhouse and all "banks create money out of thin air" types
All of you believe that banks can make loans without having to have associated deposits. In other words, as Ed stated, loans are created "out of thin air".
All one has to do is look at a bank's balance sheet to realize that's not true but, have it your way.
Under your scenario you would expect the banks to do best when interest rates are high and do poorly when interest rates are low.
But, the opposite true. Canadian banks actually lost money in Canada in the early eighties when the interest rates were the highest in the last fifty years or so.
On the other hand Canadian banks have been the most profitable ever over the last few years when interest rates have been extremely low. How do you explain that Ed?
Isn't it more likely that the banks actually borrow from A at X% and then lend it to B at X+(2 to 6)%. In other words they're renting money for a fee.
Doesn't that make more sense Ed, judycross et al?
Gonzaga
1 year ago
The Americans
George McGovern had it in his platform when he lost to Nixon back in '72, though he was totally hammered in the election cause he only got 38% of the popular vote. I don't remember if that was the issue that killed him though--I think it was because he wanted to pull out of the Vietnam War "lock, stock, and barrel" instead of through "peace with honour" like Nixon was gonna do.
Fiat lux
1 year ago
John....Before deregulation
John....Before deregulation banks were permitted to loan out about $20. for every dollar on deposit by customers.
Today they've loaned out several hundreds, or thousands, for every dollar of customer deposits. There are all kinds of statistics showing that people don't have savings. You can find the figures if you look.
The per capita indebtedness in various countries, including Canada :
http://www.nationmaster.com/graph/eco_deb_ext_percap-economy-debt-external-per-capita
The federal and public debt of Canada is about $1.1 trillion.
The US admits about $14. trillion, but according to some experts, it is between $60 to 70 trillion.
When we look at the debts of our and European countries, and the credit limits on
our credit cards, shouldn't we ask, where all that money came from to get the world into such incredible debts ?
From the deposits of bank customers?
Where did they get the money from to cover the collaterals for hundreds of trillions of loans, when the public and governments are deep in debt and broke ?
The banks may have some monies on their balance sheets, but they're mostly imaginary monies ready to be loaned out and not from deposits, because there is next to nothing.
Look up how much the per capita deposits are in Canadian banks.
Why do you think Regan, and in Canada's case Mulroney, deregulated the banks in 1991, in secret, other than so they can "create" money from the air to finance "growth", using the hoped for returns and profits as collaterals and not the non existing deposits.
What bank deregulation has really done was incredible inflation and indebtedness to "create" a false sense of wellbeing and an opportunity for a international criminal sector to take control of the world's economy and resources.
Why do you think the Bilderbergers and the Trilaterals and the World Economic Forum have secret meetings , only by invitation ?
To decide what to take over next, with imaginary capital.
Ed Deak.
Ed Deak.
John Corman
1 year ago
Ed Deak - Pay Attention
You state:
"John....Before deregulation banks were permitted to loan out about $20. for every dollar on deposit by customers."
That's never been true. and I'm surprised that you would make that statement. [OFFENSIVE COMMENT REMOVED HERE...]
More over, how can they do that?
If you look at the facts, that is the bank's financial statement, you'll see that their loans are about 80% of their deposits. (give or take)
[...AND HERE. -MODERATOR.]
Ed Seedhouse
1 year ago
"After reading all this, I am
"After reading all this, I am more confused than ever. I always thought, you had to have money to lend money, apparently not so."
If you are a person, a city or municipality, or a province you have to have money before you can spend it.
If you are the Federal government, sovereign over the Canadian dollar, you do not. And the right to do the same is, in effect, "contracted out" to the banks.
"To my way of thinking, there is only one way out of this mess, and that is the gold standard."
That is the worst possible solution and would cause a huge depression that would dwarf the one we are in now.
Go to http://bilbo.economicoutlook.net/blog/ or http://neweconomicperspectives.org/p/modern-monetary-theory-primer.html and then read, think and learn.
Fiat lux
1 year ago
Of course, you're wasting
Of course, you're wasting your time , John, not on me but by fooling yourself.
Please explain where all the hundreds of trillions people and governments owe in debts, came from, if not from money creation from the air ?
From deposits? Where did the depositors get the money to loan $1.1 trillion to Canadian governments É.
I grew up in the depression when we were dirt poor, but had no debts, because there was no money to borrow.
Now people are also dirt poor and deep in debt. Where did the money come from for them to borrow?
How is it that the credit limits on our credit cards are increased all the time.
http://www.vantagequest.org/trees/money.htm#.T7MHw8UgpsQ
Fractional reserve banking.
http://en.wikipedia.org/wiki/Fractional_reserve_banking
I`ve been in this racket long before banks were deregulated, so I have a pretty good idea what`s going on and why.
Reagan deregulated the banks, because they`ve loaned out imaginary monies , way above the permitted limits and the majority were breaking the law. There were all kinds of reports on this at the time. Mulroney just followed the trend in 1991.
Ed Deak.
freewilly
1 year ago
wow
I thought this thread was about GAI, not banking we all know the system is @#$%d.
I dont have a clue what Ed is really talking about but I'll figure it out. I dont understand quantum physics either, (maybe a bit but thats easier) My sense as as a hillbilly living in the boonies is that there a few ways to make money.
-you can work and hire people to work
-you can find ,sell work and make a percentage even though you dont own f-all
*- you can predict where work will be and sell work that hasnt happened yet, without owning anything
To Ed why cant the system, as it is, accept GAI? Im sure they could exploit the idea. It could benifit the most greedy sons of bitches in a wonderful way
Im confused
RickW
1 year ago
Kred it & Corman
From lindi6676:
http://www.youtube.com/watch?feature=player_embedded&v=Bx5Sc3vWefE
Neither of you bothered to hear what she had to say, did you? Imagine - you two taken to task by a 12 year old. Tsk.....
Frank
1 year ago
The GAI
Was a great idea when I first heard about it 40 years ago and its still a great idea.
A lot of tax money is spent on employin a lot of people to make sure benefits don't go to the wrong people. Why not just get rid of all those programs and send everyone a cheque every month which they all declare on their taxes. People that don't need it get it taxed back.
People that do need it, have it, and don't have to hire a lawyer to learn about every dollar they're entitled to from this government program or that one.
And while we're at it, move to a full employment policy. Every person in Canada should have a job if they want one. Unemployed? There's a million things we need done such as cleaning up rivers and beaches and forests. We need childcare, we need training for other unemployed.
Its ridiculous to think we invented an economy where having a couple of million unemployed and a couple of million jobs that need doing can't be solved because we lack enough of a thing we invented ourselves called money.
Frank
1 year ago
Kredit
So who did you "steal" the money from to pay for the school your kid goes to? Who will you "steal" money from to pay for your old age pension?
Ayn Rand, the anti-socialist, turned to socialism too when she got old and needed healthcare.
Fiat lux
1 year ago
free.... The brotherhood of
free.... The brotherhood of the capitalist/communists systems claim to be oppositions and "democracies", but in reality, are the reinstitution of the feudal order, where a ruling class is determining who will do what in their "wealth creating" service, to live or die.
The discussion on banking is an important part, as, while the communists used bayonets to disempower, enslave people and collectivize the economy in the hands of a ruling sector, the capitalists are using the perceived power of thew deregulation of imaginary money creation to do the same.
Witness "free trade", "globalization", the destruction of the family farm system, forced urbanization. All in the name of "efficiency" also used by the commies for the same purpose and all realized with the creation of imaginary capital.
Capitalists can not accept the idea of the GAI, because it would give people a certain degree of freedom of decision making and the loss of ruler control to force them into submission.
When Manning was up and coming, one of his demands was that "people should move where the jobs are". In other words, total control, exactly the same way as used by Stalin and now by the capitalists.
Witness the new EI laws just brought in, to force people into servitude.
Harper was brought in to go wild in his first years in office, destroy any vestiges of democracy and the protection of humanity and the environment. He's doing it, as predicted.
He'll be pulled out by his masters sometime next year, rewarded with string of directorships in good "conservative" tradition, especially to enhance the the beautiful brotherhood of the two criminal/feudal systems in China, with plans to spread them over the world.
The feudal nobility of history paid no taxes, owned the land and people. The "seigneurs rights" system empowered the local lord to spend the first, wedding night, with new brides and if a peasant even touched the weapons of a knight, he was killed on the spot.
The same system is being planned now under the fraud of "free trade" and "globalization"
We built our local school for about 45 kids in 1988, now there are around 20 and it may be closed. 14 schools were closed on the Prince George region because of the lack of students.
"Moving people where the jobs are", in other words known as total control and servitude, legalized and enforced by "conservativism" and money creation from the air.
Ed Deak.
Cynic
1 year ago
Anyone who wants to
Anyone who wants to understand where money comes from can do their own research at this useful site: http://www.monetaryreform.com/MR/videoPage.htm
Also, Positive Money of the UK are excellent: http://www.positivemoney.org.uk/97percent-owned-documentary/
John and Kredit, please have a look, because right now you're just wrong.
kookeemunsta
1 year ago
@ John Corman
John, banks need $10 in their vault to loan you $3600. You then pay them back the $3600 plus interest, all in real money. They now have $4000 cash and can loan out $1,440,000.
Banks do so well when interwst rates are low because more and more people come in wanting loans. A loan is the bank printing money. More loans means more printed money.
RickW
1 year ago
Ed
Jim (There are no bad jobs) Flaherty's new slogan: "Arbeit macht frei!"
rantnic
1 year ago
"Arbeit macht frei!"
Gee folks maybe even I, could get a minimum wage job in one of Heir Harper's new stalags. Just think, I could then start feeding the dog again, instead of stealing his food for myself.
John Corman
1 year ago
Close your eyes guys
Most of you won't want to see or hear this.
At October 31, 2011 the Royal Bank, according to their published financial statements attested to by many outsiders had loans outstanding of about $296 billion. Customer deposits was about $444 billion.
Go to RBC.Com and read it for your self under publications/annual reports/2011/ page 84.
That is if you actually want to know what you're talking about.
freewilly
1 year ago
Its all disheartening
Harper changing the rules EI, cuts and benfits to the poor and it goes on and on. I guess I figured it wasnt going to affect my family for awhile, but its here, on our doorsteps.
"And while we're at it, move to a full employment policy. Every person in Canada should have a job if they want one. Unemployed? There's a million things we need done such as cleaning up rivers and beaches and forests. We need childcare, we need training for other unemployed"
Couldnt agree more with that idea. There was a time when the government created work for people on EI, lots of 'make work' jobs. Instead they decided to contract out pop psychologists and 'job clubs' telling people that they had self esteem issues and needed to market themselves properly. (ive been to through many job club programs). Im a handicapped person on a federal pension but I have high tech skills. Id love to use them, and I still keep up my chops. Ive never really been allowed to do what I am capable of,however when someone is in dire need to get a particular problem solved wiether its a computer issue noone can solve, a coding problem, even a math problem they will call me as a last resort. I will solve it.
Im not going back to work as a roofer, or a labourer, even though I do some light industrial work to make ends meet, I shouldnt have to, thats the reality these days, and its not all that bad. The things Ive had to do amaze me.
I'm not fit or have the apptitude to do them, yet the system forces us into being creatures that we are not. I see young strapping healthy young people with zero patience or talent trying to be programmers, teachers, designers, architects and so forth. Our workforce is all messed up. Ive worked for temp agencies where poor disabled, mentally handicapped persons have to do the most dispicable jobs to make a dollar. Thats another reason we need a GAI. Nothing is ever fair, of course, but Canadians as a whole, are becoming a disgusting, unempathetic and ignorant race. No matter what rational Ed comes up, and I beleive in some of it, Canadians are by and large, bigots. They voted for bigots. If they didnt see what was coming then they were ignorant.
Cynic
1 year ago
John, what's your point and
John, what's your point and what's your problem. Either you know where money comes from or you don't, and you don't, so please do your own research. There is no shortage of sites on the net to help you out, so get with it and please hurry up.
Kudos to Judycross and Ed and the others who pay attention and reject the elite fantasy.
Fiat lux
1 year ago
If there's one thing that I
If there's one thing that I have learned in my rather long life, under every known ideology, it is that there's no point in arguing with the faithful, because faith conquers all.
My mother was an extremely talented person who fed us on pennies and we still have a hopechest full of her fantastic craft work.
But she was a red hot royalist, who was certain that God created the royalty to rule.
She lived the last 37 years of her life in England, most of it as a Brit citizen. To her last day she maintained that the Brit PM went to the Queen every week to get his, or her, orders on what laws the Queen wanted to pass.
I've tried to explain to her that the Queen had no legislative rights, or even a vote, but she had to sign papers to make the decisions of the government legal.
She broke contact with me, once for 7 years over this nonsense.
Our faithful "conservative" believers in Harper and the banking system remind me of her.
According to the Globe and Mail the per person debt load in Canada is about $24,600. outside of mortgages.
No wonder Canadians have so much money to put into their savings account in the banks.
But going back to the GAI, the convention of the Reform Party passed a motion, at the height of their popularity, to do away with the Old Age Pensions and replace them with RRSPs.
I wonder when Steve moves on this, supported by our friends on this blog. After all , we're all swimming in money, shown in bank deposits, with the government strongly denying and opposing a UN report on Canadian hunger rates.
Not true at all, according to our Ministers. Those 900,000 who line up at foodbanks are only doing it for fun and company.
I wonder if the government will ban any UN officials in the future ?
Ed Deak.
Frank
1 year ago
John doesn't get it
We had this discussion before. John thinks the customer deposits are sitting there in the bank.
Bank A lends John $500,000. John buys a house and gives the money to Kredit. Kredit deposits the money in Bank A and John owes Bank A $500,000.
John thinks that means the bank's credits and debits match. It doesn't, the $500,000 was created out of thin air and the bank has the money it created (which it can now lend out again and again) plus is owed another $500,000 plus interest.
Chris J
1 year ago
The thin air money debate
Frank,
The money was not created out of thin air. Someone deposited it. The bank had $500 to loan out because someone deposited, aka lent it to them. The $500 that Kredit deposits could be withdrawn by whoever deposited it in the first place.
John is not assuming (if i can assume to know what he is assuming) that the deposits are in the bank.
Fiat Lux asked where did the depositer get the money. That's a good question. That's more the heart of the matter here. It was not created by banks loaning out 300% more than the depositors had deposited, you see what I'm saying? Banks can only loan out what people have deposited. It doesn't have to be physically in the bank, but it has to be on the ledger. And I think John's source of the bank's reports back that up.
I'm not defending the banks, but if we are going to attack the banks, attack them for their actual crimes, and not invented systems.
12 year old Victoria is remarkably intelligent, but wrong, like so many people. She is correct than the banks and government are colluding to enslave us with debt, but not by creating fake money. She says banks only have $4 billion in reserve but have loaned out however many trillion. The 'reserves' are the actual physical cash. The rest is just numbers on a computer, but matches with what is deposited. When you deposit your paycheck, you don't deposit cash, you deposit the 'fake' 'thin air' we keep talking about. That's why it's isn't part of the cash reserves. The point is that every dollar lent out by the bank may not have come into the bank as a coin or bill, but it existed as an deposit. The idea that banks loan out more than people deposit is the fallacy.
An intelligent 12 year old is great, but not a valid source for information. Neither is any other pundit site that spins a good argument but in nonetheless false.
Chris J
1 year ago
Oh man, wait a second, I see
Oh man, wait a second, I see what's happening here.
So someone deposits $500, and so there is a 500 account. The bank loans that and it is deposited, and now there are two $500 accounts, and the bank can loan 1000, which can be deposited, then loan $2000. Hmm, it's confusing...
Chris J
1 year ago
so I'm wrong
Fractional reserve banking does create money, seemingly out of thin air...
Fiat lux
1 year ago
Chris.... The banks have been
Chris.... The banks have been able to loan out $20, for every dollar on deposit, for ages, until Reagan deregulated them, followed by Mulroney in 1991, so they can loan out incredible sums, from the air.
That's why the US government had to bale them out.
How in hell can governments and individuals borrow huge amounts, on credit cards for example, when people are broke and up to their necks in debt?
Why did they have to be deregulated, for what purpose ?
Ed Deak.
Holistic Party
1 year ago
Gai
The Gai will also change the present drift of the unemployed to the cities where they can get handouts on the street corners. Housing is less expensive in small towns and the choice to live a life of voluntary poverty is much more pleasant in rural areas. Living solely on the GAI is a choice that few would make - but maybe its better than minimum wage jobs.
Frank
1 year ago
Chris J
Just checking, are we on the same page now?
Chris J
1 year ago
Frank
yeah. I spoke too soon, before I had it figured out. As I read more, I see it's a pretty established fact that Fractional Reserve Banking creates money, as illustrated in the wikipedia link someone posted above.
John Corman
1 year ago
Cynic et al
Let me see if I've got this straight.
Instead of doing some research yourselves and try and analyze the financial information reported by a bank you guys would rather take advice from a twelve year old girl.
Obviously, we have to considered why
you seem to be able to relate so well with a twelve year old's intellect.
I assume she's telling you what you want to hear. That is that banks loans "come from thin air" much like a miracle.
Fiat lux
1 year ago
John.... Some of us have been
John.... Some of us have been in the economics racket and, unlike "conservatives", know what we're talking about, without having to lie about it..
As far believing in anybody is concerned, I'll believe a 12 year old girl any time before believing anything Harper and his gang are saying.
Now please tell us, where did the $1.2 trillion owed by the Canadian public, the alleged $14 trillion, in reality closer to $70. trillion owed by the USA, and thetrillions owed by Greece, Italy, Spain, Portugal and Ireland come from ?
From bank deposits ? Who deposited that money from where ?
Let's hear the "conservative" version, with the usual "faith conquers all" claim.
Ed Deak.
freewilly
1 year ago
sipport for GAI but...
While I wholely support GAI and if it became government policy, Im sure that inflation or the cost of living would rise. Any extra income recieved by the bottom fish would be wasted on frivolous crap or squandered away.
Money isnt a panacea to poverty, real goods, food, housing and health services are.
Frank
1 year ago
John
I bet that 12 year old girl knew that the economic growth figures provided by Stats Can are inflation adjusted. Something you didn't.
I am also willing to bet that that 12 year old girl knows 3.05% is bigger than 2.35%, which is another thing you didn't know.
Chris J
1 year ago
http://en.wikipedia.org/wiki/
http://en.wikipedia.org/wiki/Money_creation
profitSlave
1 year ago
Greetings fellow slaves.
The money system is a scam. The economy is a scam. The TV has destroyed your brain. The propaganda of capitalism has destroyed the planet. We are running out of time fast. Our leaders WILL destroy us.
Wake up and assert your natural rights. The Financial Party of Canada will help you. Check it out. http://www.financialParty.ca
Frank
1 year ago
profitSlave
Your website reminds me of the guy that went to jail for 4.5 years last week for counselling people to not pay taxes. He also talked about "natural rights" and how when we're born we should be allocated money based on the GDP and all that.
Are you connected with him?
Regardless, isn't your platform akin to a guaranteed annual income?
Cynic
52 weeks ago
profitSlave, I like it! Are
profitSlave, I like it! Are you affiliated with comer?
RickW
52 weeks ago
profitSlave
But - who will own the mansions and buy the lamborghinis?
profitSlave
52 weeks ago
Frank, Cynic, Rick
No Frank, I've never even heard of him (I stopped ingesting the emotional poisons of the mainstream media a few years ago).
The Financial Party does not counsel or suggest anything that is illegal. We love freedom and have no wish to dispose of our own.
Right on Cynic. In the mid-90s COMER turned the lights on, inside my head. Since then I've followed my own inquisitive paths.
Well Rick, they'll just become part of the history of our "Blind Spot" ...relics from a foolish, impractical, destructive past.
profitSlave
52 weeks ago
Oh ya...
Frank, the Financial Party's entitlements are a guaranteed annual income. That's the reason I chose to post to this thread.