By Simran Dhunna and David Bush
Basic Income is now on the table. This was the message that Canada’s Labour Minister, Filomena Tassi, gave reporters at the Liberal caucus retreat in early September. With the Canada Emergency Response Benefit (CERB) set to wind down by the end of September, calls for a basic income have re-emerged. Should the left support it?
The majority of the current 4 million CERB recipients will be transferred over to Employment Insurance and various Canadian Recovery programs. The Liberals brought in sweeping temporary reforms to EI, making it easier to qualify, upping the minimum benefit and its minimum length, and introducing special benefits. Even with these reforms, 74% of CERB recipients who move over to EI will be worse off, reflecting real gaps in the transition. Some still won’t qualify for EI, and many who do will receive the minimum $400/week for the EI regular benefit or the Canada Recovery Benefit, rather than the $500/week received on CERB.
Basic income has not only become a political question within the Liberal Party, with Liberal MPs making it their top resolution for the Liberal convention in November, but the Green Party and even the NDP also seem to be lining up behind the idea. In August, NDP MP Leah Gazan put forward motion M-46 Guaranteed Livable Basic Income to replace CERB on an ongoing and permanent basis. This motion not only garnered support from some NDP MPs, but it was also backed by the leadership of the United Steelworkers.
Basic income’s appeal
After decades of attacks on welfare programs and social services, and the harsh reality of the current economic crisis, many people are understandably attracted to the idea of a baseline of universal income that would allow people to live in dignity.
Since the onset of the pandemic, support for basic income has undoubtedly swelled as millions of workers are facing unprecedented levels of unemployment and loss of income. CERB appears, at first glance, to bolster the notion of basic income. As an unprecedented income transfer that was delivered without the level of surveillance and punitive bureaucracy accompanying other income support schemes, CERB genuinely provided relief to millions of people in Canada.
The economic recovery thus far has completely diverged along income lines, taking on a K shape. Workers with the lowest-paying and most dangerous jobs (disproportionately women, racialized, and migrants — often a combination of these), have been struggling immensely while the top income earners have more or less recovered
However, as much as we agree that income supports should be strengthened, humanized and expanded, there are a number of reasons for the left to remain deeply skeptical of basic income.
The basic costs of basic income
If we are earnestly debating a reform, we should be clear about exactly what that reform is, how it would work effectively and build worker power, and what it will take to achieve it. One of the main problems when analyzing basic income is the level of abstraction at which it is discussed. For instance, Leah Gazan’s motion for a guaranteed livable basic income does not outline even a rudimentary cost or implementation of the program. This is not exclusive to Gazan; almost all proponents of basic income talk about it as a general idea. Talking about basic income as an idea, especially as a vague political vision divorced from movements, makes debating its relative merits impossible and obscures political and strategic clarity.
So let’s get specific.
When people talk about basic income, they can mean two different policies. The first is a Universal Basic Income (UBI): regularized income payments to every person regardless of their level of income. The second is a targeted basic income: regular payments based on some sort of means-testing (eg. income transfer to people below a relative poverty threshold).
If our demand consists of a UBI of $24,000 per year for Canadians aged 18 and over, we are looking at a front-loaded cost of $696 billion every year. This is roughly double the current national deficit (approximately $350 billion), or put another way, 40% of Canada’s GDP (for reference, the country’s overall health spending makes up 11.6% of our GDP). A UBI at a lower level of $1,000 per year for people aged 18 and over comes with a more modest $29 billion price tag — roughly 14 percent of the entire federal budget pre-pandemic. On the other hand, a targeted basic income through a negative income tax set at $21,810 (if you are earning below that amount, you would receive a cheque that boosts you to that level) would, according to one study, cost roughly $177 billion a year (the latest Basic Income Canada Network study puts the cost somewhere between $134 to $187 billion).
In 2018, a study published by the International Labour Organization calculated the costs of a UBI in 130 countries that would raise everyone above the poverty line, and concluded it would on average cost between 20 to 30 percent of GDP. This is a staggering annual cost for one program that, in many countries, is near or even greater than all other government expenditures combined.
Some of the appeal of UBI comes from the wishful idea that it can solve all of our problems at once, lifting people out of poverty and making education and public services accessible. But the basic costs show that UBI is, by any measure, a terrible use of resources to address inequality and poverty. As the CCPA’s David MacDonald noted in his study, the $29 billion spent on such a UBI scheme would achieve — at best — less than a 2 percent reduction in the poverty rate, which would “be quite wasteful” when considering the amount of money spent.
This is where we should insist on framing the issue of a basic income as a question of opportunity cost. The high public cost of all basic income programs have to be weighed against how this money could be otherwise deployed in our society. At the cost of $29 billion annually, we could have free transit in major cities ($10 billion), clean drinking water for every First Nation ($4.5 billion), eliminate tuition fees at all universities ($11 billion), and end homelessness ($4.5 billion). If we are spending $177 billion dollars a year (the cost of a negative income tax model to raise people to $21,810), we could have all of the above plus a universal pharmacare program, universal childcare, universal dental care, and begin to implement a robust public housing policy.
Experiments in basic income
In 2019, Public Service International (PSI) released a wide-ranging report assessing UBI pilots and experiments globally, as well as academic literature. The report concluded that, “making cash payments to individuals to increase their purchasing power in a free-market economy is not a viable route to solving problems caused or exacerbated by neoliberal market economics.”
Many of the basic income experiments piloted by local governments ended rather abruptly, either running out of money, or ending after a newly elected government without the political commitment to the project axed the program. These are not just unfortunate bumps in the road, but speak to the real political and economic inviability of basic income. As the report summarized, “there is no robust evidence relating to UBI defined as unconditional, regular cash payments to individuals regardless of income or status. The schemes have seldom lasted long enough to test viability over more than a few years.” Thus, there is “no evidence that any version of UBI can be affordable, inclusive, sufficient and sustainable at the same time.”
The longest and largest sustained experiment in basic income is Alaska’s Permanent Fund dividend. Starting in the 1970s, the Alaskan government created a special state-run fund from a portion of oil revenues. Since 1982, the fund pays out a dividend to every permanent resident of Alaska (this annual amount has ranged from $1000 to $2000 per year in recent years). The newly elected governor of Alaska campaigned to increase the dividend, but this came at a cost. To pay for the increase, Governor Mike Dunleavy has pushed a series of cuts to the public university system, ferry service, and other public services. The economic crash in 2020 reduced the dividend payment to $992, and there is now a real question about whether the fund will be able to issue any dividends at all in the coming years.
While some on the left pitch basic income as a complement to strong public services, the outcome of basic income is the opposite. As the report warned, “there’s a serious risk of crowding out efforts to build collaborative, sustainable services and infrastructure – and setting a pattern for future development that promotes commodification rather than emancipation.”
Instead, it argued that resources spent on a UBI would be better used to expand public services and reform existing social supports. As Anna Coote, one of the authors of the report, explained, “Collective provision offers more cost-effective, socially just, redistributive and sustainable ways of meeting people’s needs than leaving individuals to buy what they can afford in the marketplace.”
Political opportunity cost
Many claim that we can simply fight for basic income at the same time as we fight to raise the minimum wage and improve social supports. But pursuing UBI doesn’t just have an economic opportunity cost, but it also comes with a very real political opportunity cost. It takes time, energy, and focus to fight for reforms. Prioritizing a basic income invariably means deprioritizing other struggles and demands.
We saw this play out under Ontario’s Liberal government in (2014 – 2018), when the Wynne administration’s advocacy for Ontario’s Basic Income Pilot came at the same time as the Changing Workplaces Review, a comprehensive review of Ontario’s labour laws that would serve as a key tool to advance rights for low-wage workers. The Liberals’ fervent focus on the basic income pilot served to divert working class demands to raise social assistance rates, invest in stronger social services, and swiftly implement workers’ demands for paid sick days, a $15 minimum wage, and more. Just as it does now, UBI stoked confusion and division among the left.
While the basic income pilot was scrapped by the incoming Ford government, anti-poverty groups such as Ontario Coalition Against Poverty and unions like OPSEU were clear about their apprehension when it was introduced. The pilot was a targeted basic income for low-wage workers who would receive a monthly cheque above social assistance rates, but that would in effect subsidize businesses and make it easier for them to keep wages low. People in the program benefited from increased financial assistance, which was not a surprise to anti-poverty activists who long claimed they didn’t need a pilot to tell them that social assistance rates were criminally low. Individuals with disabilities were also vulnerable to losing other supports as a result of the pilot (eg. Special Diet Allowance, medical transportation assistance, mobility aids).
But what if the money and political capital spent on consulting and testing a basic income pilot had instead been spent on reversing the severe OW and ODSP cuts made under the 1995 Harris government (at a cost of $4 billion), as demanded by the Raise the Rates campaign?
Fast forward to today, the potential for UBI to subsidize the capitalist class and distract our movements persists. For instance, tenants — as part of campaigns run by Parkdale Organize, MnE Unite, and People’s Defence — issued a clarion call against housing precarity during the pandemic. They have been organizing rent strikes, demanding rent freezes, and fighting against mass evictions. These demands by working class people are vulnerable to being silenced and overshadowed by the flashy UBI advocacy raining down from above.
Why demand that everyone be given an insufficient cheque that will be simply be handed to their unforgiving landlord, when we could simply demand ever more staunchly that rent be frozen and quality public housing be built? As Dan Darrah notes, “Without directly addressing the commodified housing market, UBI works like a never-ending capital-bailout-carousel that simply reroutes public money into the pockets of property owners by way of its recipients, simultaneously propping up an outrageous housing crisis.” A UBI runs the risk of not only subsidizing the bosses, but also the landlords who are raising rents as we speak.
The capitalist case for basic income
Whenever an idea gains steam, it’s worth asking: who is calling for it, and why? While some on the left and segments of the NDP are now taking the idea of UBI seriously, some of its key proponents have included the likes of Silicon Valley CEOs, previous Conservative PM Brian Mulroney, Milton Friedman, right-wing political scientists like Charles Murray, and politicians across the political spectrum.
To many UBI proponents, we are consumers first. Brian Mulroney’s previous chief of staff, Hugh Segal, is quoted by UBI Works as saying “People who get a basic income have the ability to be customers. They have the ability to generate liquidity. To be in the marketplace themselves.” UBI Works, an organization that explicitly strives for “human-centered capitalism,” was also the host for the “Basic Income March” held in some Canadian cities. A cursory look on their website reveals that their team is made up of CEOs and marketing experts, and their “Backers and Believers” of UBI is a suite of CEOs (there is in fact no shortage of lists of CEOs advocating for UBI).
You don’t have to look too closely to recognize that none of these UBI proponents represent the working class, unions, or grassroots working class organizations.
Some on the left look to basic income to complement workers struggles, but the ruling class looks to basic income to blunt class struggle. When the fight to raise the minimum wage was at its height in Ontario, the Ontario Chamber of Commerce countered calls to to raise the minimum wage by stating, “we support the Government’s piloting of a Basic Income, which we see as a more efficient and realistic means of ensuring Ontarians are given greater security.” The business community was in favour of basic income because it acted as a political shield against reforming labour laws, and because a basic income also acts as a wage subsidy for businesses. Employers would be relieved from the pressure of increasing wages from their own coffers and put the onus on the state to top up incomes through general revenues. The burden of payment would shift from the employing class to the rest of us.
Basic income would have the effect of distancing workers’ labour from their wages. Instead of being paid directly for their work, part of the wage of workers would come from their own tax dollars in the form of basic income. Workers are powerful because of their social location in relation to production. But having the state subsidize employers’ wages clouds the relationship between workers, employers, and their profits. Instead of pushing against employers in relation to their profits, workers would have to formulate their demands in terms of a social wage funded and administered by the state. This would have the effect of obscuring class division, exploitation, and capitalist social relations in society. A state subsidy of wages could easily disempower workers as a class relative to employers by blunting the class struggle and turning it into a technocratic argument over the degree to which the state should subsidize employers’ wages.
Instead of ending poverty, UBI could in reality entrench low wages and precarious work, and reduce workers’ bargaining power. In part, this reflects an analysis that understands that the state’s role under capitalism is to create conditions of profitability for capitalists, such that workers are further pushed into the labour market. There is a serious possibility of the state vehemently attacking public sector unions, and putting downward pressure on unionized workers’ wages as a result of lower wages under BI, as has been the case in Alaska. Moreover, working class people would be left to sustain even more brutal assaults to our public services as politicians seek to justify recouping the costs of UBI through austerity.
The right would also see UBI as a route towards union busting. Libertarian economic pundit Steve Randy Waldman argues that “Supplementary incomes are a cleaner way of increasing labour bargaining power than unionization.” In the same way that some on the left see UBI as a panacea for income inequality and exploitation (UBI appears to reliably rectify neither), some on the right see UBI as a magic wand that will finally rid them of the nuisance that is workers’ collectives.
We stand to lose much more than we have to gain under a basic income regime doled out by the ruling class. Our energy and money is better spent waging struggle directly to strengthen labour laws and access to unionization for all, to build more power at the point of production — the source of worker power — and tenants face-to-face with the propertied class.
Public services or private markets
We cannot afford to be naive: whether we like it or not, basic income is a live question. Whatever basic income the ruling class thrusts on us, it will not be the utopian UBI haven some would like to believe. It will be constrained by the status quo, molded by the ruling class, and concocted without us in some parliamentary laboratory, divorced from our realities and collective struggles. It will reflect the existing balance of class forces that coerce working class people to submit to capital. The forces that have attacked hard-won welfare programs would not disappear because UBI exists, but would directly shape the implementation of a UBI program.
A UBI scheme derived from the state will only reinforce capitalist relations of power and property between tenants and landlords, workers and bosses. What makes us think that a Liberal and/or NDP-led UBI will challenge an economic system that relies on low-wage Black and brown migrant labour? The fantasy that everyone would have the freedom to not work or choose the jobs they want under a UBI simply would not be afforded to a Jamaican migrant farmworker or meat-packing factory worker. It will not be sufficient enough to upend the asymmetry of power between workers and employers, because for such an asymmetry to be challenged by a UBI, the capitalist state as we know it would have to abolish itself first.
Above all, the capitalist class wants us to rely on the market — its bread and butter. UBI serves to entrench our dependence on market forces for survival, paving the way for further privatization and individualization. There is nothing the rich would love more than for us to have a bit more pocket change to buy what they sell, with the profits funnelled to a wealthy few. But those committed to principled class struggle should strive for the decommodification of public services. Compared with universal basic income, universal basic services cost less, meaningfully improve the material realities of working class and oppressed people, and affirm the power of publicly owned and operated infrastructure. That’s our bread and butter.
Not going back to normal
The pandemic has not only unveiled the brutality of capitalist exploitation, but also the ease with which the ruling elite can shuffle money around when they feel immense pressure. So it’s understandable that some might see UBI as a viable solution to compounding inequality and poverty. However, we must be willing to step back from the realm of utopian policy-making, and instead be clear-eyed, concrete, and strategic.
Deeply entrenched wealth inequality and exploitation is not a function of flawed social policy; it’s a question of economic and political power concentrated among and leveraged by the capitalist class. This is why workers’ movements in Canada have been weakened for decades, resulting in cuts to social assistance rates, social programs, and increasing wealth disparities at the expense of racialized workers, migrants, and women. A UBI, unfortunately, fails to grasp the question of power and how to shift the terrain of power.
“No going back to normal” means that we should not be quick to place our faith in market-reliant policy reforms. Why capitulate to a top-down policy regime that not only falls short of challenging capital, but also gives capitalists more fuel to erode our movements? Instead, the left ought to push even harder for the concrete demands we have in front of us: improve income supports by strengthening and regularizing the new changes to EI, raising social assistance rates, status for all, paid sick days, improving tenants’ rights while investing in public housing, and gearing up for the fight for universal public services.
Now is the time to double down on concrete, movement-driven demands that build worker power instead of half-measures offered by the ruling class.
Interested in discussing basic income? Join Spring’s webinar “Universal Basic Income: Should the left support it?”, October 4, 3pm EDT: https://www.facebook.com/events/406748450313592
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