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News

Meet the Economist Advising BC on Whether to Go Ahead with a Basic Income

‘I’m an agnostic because I can see both sides,’ says UBC’s David Green.

By Geoff Dembicki 18 Jan 2019 | TheTyee.ca

Geoff Dembicki reports for The Tyee. His work also appears in Vice, Foreign Policy and the New York Times.

The idea of adopting basic income in B.C. is appealingly simple.

During an era when the gap between rich and poor is reaching levels not seen since the Gilded Age, machines threaten to automate tens of millions of jobs and owning a home is becoming impossible, the idea that governments should make no-strings-attached cash payments to citizens struggling to survive seems to make sense.

That’s the basic logic of an idea that has been debated and tested in Canada for over 40 years and is at the centre of a potentially groundbreaking new $4-million study funded by the B.C. government.

The three-person expert committee leading the study will compile findings from about two-dozen independent research projects later this year.

It will also write an advisory report that could urge B.C. to go ahead with a pilot project where the government automatically tops up the paycheques of people earning below a set level.

But don’t count on seeing a B.C. basic income program yet.

David Green, the University of British Columbia economist chairing the committee, says he’s not passionately for or against the concept of a basic income and speculated that’s why he was chosen for the role.

“I’m an agnostic, because I can see both sides of the argument,” Green said in a recent interview in his office.

On the one hand, he said, it’s clear that our economic system isn’t working for large numbers of people. Many jobs, especially for younger people, are becoming precarious and poorly paid. Average rent for a one-bedroom apartment in B.C. grew by 24 per cent between 1990 and 2016, homelessness is up by 30 per cent in Metro Vancouver and welfare benefits are meagre and hard to access.

Basic income could simplify our welfare system and immediately improve the economic well being of low-paid workers. “[It] seems like a natural answer, in some ways,” Green said.

But in other ways, basic income may be less than ideal. The cost alone could be a deal-breaker. One study estimated the gross cost of a national basic income program at $76 billion, which could be reduced by using the $32 billion the federal government currently provides to support low-income Canadians. (Supporters also argue a basic income program would reduce poverty and provide savings in other areas, like health care).

Even if B.C. mustered the political will to adopt basic income, there’s no guarantee a future government wouldn’t cut it. “So you can see I’m bouncing back and forth,” Green said.

The advice from the committee — which also includes Jonathan Rhys Kesselman from the Simon Fraser University and Lindsay Tedds from the University of Calgary — could affect the lives of hundreds of thousands of people across the province.

Hugh Segal, a former Conservative senator and long-time advocate of basic income in Canada, told The Tyee that he’s “delighted and pleased as punch” with the expert committee’s mandate.

Experts outside the country are also watching. Ioana Marinescu, an economist at Penn University who has spoken with Green, said that if B.C. implemented a full-scale basic income program, “I’d be wowed in terms of what we can learn from it.”

‘The nature of work is changing’

The idea has been percolating in B.C. for years. Green leader Andrew Weaver supports a basic income and the commitment to test and study it was included in the Green-NDP co-operation agreement that allowed the New Democrats to form government.

In a 2016 interview with The Tyee, Weaver said that a basic income could help people survive in an economy shifting towards precarious, short-term jobs. “It’s clear the nature of work is changing,” he said.

Weaver hoped at the time to set up a multi-year pilot project in a medium-size community such as Prince Rupert, Port Alberni or Burns Lake. But when B.C. sought expert opinion on doing a pilot, some people raised fundamental questions about basic income. Green’s committee was set up to help find answers. (Weaver has accepted the decision to proceed with a study first.)

I asked Green which of the roughly two-dozen research projects he’s overseeing excites him the most.

One, he said, is taking a closer look at a claim often made by proponents of basic income: that the security of knowing essential needs will be met allows people to spend more time caring for family members, volunteering and doing other things not valued financially in our economy.

To test the evidence, UBC economist Craig Riddell and Waterloo University’s Chris Riddell will be combing through data on how people in Manitoba used their time when given basic income in the 1970s.

That pilot program, known also as “Mincome,” became known worldwide after University of Manitoba researcher Evelyn Forget tracked down thousands of boxes of data from the experiment in the basement of a Winnipeg archives and wrote a 2011 paper titled “The Town With No Poverty.”

Small-Evelyn-Forget.jpg
University of Manitoba researcher Evelyn Forget dug up the data of the 1970s Dauphin, Manitoba basic income experiment and authored a recent book on the subject.

One of her most cited findings was that hospital visits in the small farming town of Dauphin, whose residents got payments from 1974 to 1978, declined 8.5 per cent. She argued it was partly due to improvements in people’s mental health.

Knowing that you can support yourself and your family can lift a huge psychological burden, she said. “[One] important thing that a basic income does,” said Forget, who is author of the recent book Basic Income for Canadians, “is that it provides a sense of security.”

I asked Green what he thought about the idea. “That’s definitely an argument in favour of basic income,” he said. But it may also depend on how we want our society to think about security.

Programs like Employment Insurance help people navigate unplanned disruptions. Green isn’t convinced that replacing those types of social programs with a basic income, as some advocate, will make people’s lives less precarious.

“If there’s a risky thing that comes along,” Green explained, like losing your job, “is there going to be insurance that kicks in or are we going to turn to people and say ‘no we already wrote the cheque to you?’”

There’s another way of thinking about security, though. In an era of rapid technological change basic income could give people the flexibility to leave careers that are becoming obsolete and get retrained for new ones.

“That’s a claim that’s made,” Green said. “I don’t know of anybody who’s provided evidence on that.” But in his report to the B.C. government, Green may be incorporating research now being done by McMaster University economics professor Arthur Sweetman into whether the financial security of a basic income does indeed encourage people to seek greater retraining and education. “So that’s one of the things I’m very excited about,” Green said.

Doubts from the right and left

The answers to questions like these could make B.C. an international leader in basic income research.

But the expert committee is also building on decades of debate, experimentation and research around the policy in Canada and the U.S.

We can say with a fair degree of certainty that in the five basic income pilot projects conducted in the U.S. and Manitoba in the 1970s, as well as ongoing dividend programs in Alaska and Cherokee Nation territory, getting free cash didn’t result in people deciding not to work.

“Despite some of the fears, the effects on work are in many cases zero and when they are there, they’re relatively small,” Marinescu told The Tyee.

Researchers point out that people work for reasons beyond just money. A job can provide meaning, identity and dignity.

But Segal notes working on its own, especially in today’s economy, is no guarantee of material wellbeing.

“In British Columbia, as in Ontario, 70 per cent of the people who live beneath the poverty line have a job,” Segal said. “Some have more than one, some have to have two or three low-paying jobs and still they barely get [by].”

Yet as Segal saw when Ontario Premier Doug Ford abruptly ended the province’s basic income pilot — a program based on Segal’s expert recommendations — facts can matter less than ideology when evaluating notions of fairness in our economy.

“There’s this general view that if you pay people not to work, why would they work?” Segal said.

That view is often built on the idea that poverty is the result of individual moral failing. But by topping up people’s earnings without judgment, basic income puts forward the alternate idea that poverty is instead based on flaws in our economic system. This makes it a hard sell to conservatives like Ford, who argued “the best way to help people out of poverty is something called a job.”

But a volume of essays on basic income published by the left-leaning Canadian Centre for Policy Alternatives also showed progressives have doubts about the policy. “At its most extreme,” wrote Jennefer Laidley of the Income Security Advocacy Centre, “basic income can be an excuse for governments to eliminate critically important public services.”

The complex and polarizing politics of basic income are something Green must consider in the advising the B.C. government.

Throughout the 1980s and into the 1990s, much of the growth in income inequality in Canada was tempered with taxes on higher-income people and generous social programs, he noted.

“Somewhere around the mid-1990s, the bargain broke down,” Green said. Governments at all levels rolled back social spending and made tax cuts, allowing inequality to grow unchecked. Green worried about the disruptive effect if a basic income program is introduced in B.C., and then abandoned.

He wonders if it might be better in the long term to redistribute society’s wealth through the labour market, for example by bringing in a minimum wage that enables people to actually meet their needs in increasingly expensive cities like Vancouver or adopting laws building the power of unions.

“This has to me two advantages,” he said. It lets people retain the dignity of working. “The second is that I think it’s harder to take away,” he said.

But as Green spoke he added caveats and conditions. Focusing on the labour market could exclude people, such as those suffering from disabilities, for whom full-time work isn’t an option. He laughed to acknowledge the intellectual and moral maze he’s been tasked with navigating.

Yet there is one thing he is certain of, an unshakeable conviction that continues to drive him forward.

“In a society this rich,” he lamented, “we should not have people living on the street.”  [Tyee]

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