Basic Income Plus: A 21st century social safety net for everyone

Recently, the idea of a universal 'basic income' has been popping up again. According to the Globe and Mail, Canada's government is considering it as a way to fight poverty. In the United States, Silicon Valley types are embracing the idea and it seems to be growing in popularity, worldwide, among socialists and libertarians alike.

In case you are unaware, "basic income" is a hybrid of the capitalist and socialist systems. It is a system that accepts that government has a role to play in redistributing wealth. However, it does so in a universal way, with a bare minimum of government bureaucracy or interference.

While there are a variety of ways to approach it, a modern system would (according to me at least) look something like this:

Every adult who filed taxes, including those who filed to report zero income, would receive $20,000 per year. There would be nothing to apply for, no means testing, the cheques would simply start arriving, every month. To this I would add $6,000 (500 per month) per child as a replacement for provincial “baby bonuses”.  Under this system, a couple with two children would receive $4333 per month, regardless of any other income. A single individual with no children would receive $1667.

That may sound like a great deal of money (and it is) but it is not as expensive as it looks at first blush: First of all it replaces the welfare system and food stamps. It also replaces nearly all programs created to assist the poor, except for those that for addicts and the mentally ill (which fall under health care and public health and safety.) It should also replace all other tax credits, write offs, and deductions.

The minimum amount a person could make without paying taxes would be $20,000 per adult plus $6,000 per child. Any additional income, and so all income from work, would fully taxable without any deductions, write offs or tax credits. That means that more people will be paying more in taxes even without changing the tax rate.

The continuous economic stimulus, created by the minimum income would also generate additional revenue.

If you give a wealthy person $20,000, they might spend it, they might save it or they might invest it. If you give someone with no money an additional $20,000 they will spend it, creating increased demand for products and services. That increased demand generates economic activity, taxes and jobs.

The basic income approach is popular on the left. It helps the poor without subjecting them to the bureaucracy and humiliation of the welfare system. It provides automatic assistance in times of crisis, without a need to go and apply for it and then wait for an answer. It reduces income inequality and guarantees the working poor a place in the middle class.

A single individual, with no children and a minimum wage job (in Ontario) would have an annual income of $42,000 per year. A couple with two children and only one full time, minimum wage income would see $74,000 rising to $95,000 with two minimum wage incomes.

Basic Income is also increasingly popular with the libertarian right because it helps the poor while reducing the size and power of government. It gives assistance to those who need it, to the extend they need it (benefiting the very poor greatly, people in the middle somewhat and the very wealthy almost not at all). However, it does so while dramatically reducing bureaucracy and without government influence over how the money is used.

Under this system, government collects names and writes cheques and has little influence beyond that. Because it erases other tax deductions, exemptions and credits, it would also simplify the tax code, reducing it to a single table and a one-page form.

Why Now?

The reasons for the sudden spike in interest in this system, are income inequality and an uncertain labour market. We are already in an era where people change jobs and even careers on a regular basis. This situation is about to get much worse. Over the next few decades, robotics, artificial intelligence and other automation technologies are expected to have a significant impact on the work force. Automation will take over most "unskilled" labor and even some jobs that require advanced degrees.

According to a study from the Oxford Martin School, 47% of all jobs in the U.S. could become automated over the next 20 years. The industries hardest hit will be the types of high paying, low skilled jobs that tend to prop up the middle class including manufacturing, shipping, transportation, mining and service sector jobs.

Some believe that new jobs will arise as a result of this automation, others are more skeptical. It seems obvious though that the freelance, temporary, seasonal and part time job markets will dominate even more than they already do.

Given all of this, I don’t believe that the basic income by itself is enough. We need to go beyond providing a sustenance level income and provide people with the tools they will need to respond and adapt to an ever changing job market and an uncertain world. I would suggest three additional programs to achieve this and create a system I call Basic Income Plus (BI+).

Health Care

The first is already in place in Canada. Our health care system is excellent though it could use an influx of money. However, the current system leaves large gaps in the areas of mental health, addiction, pharmaceuticals and basic dental care.

Individuals with mental health issues or addiction problems could still find themselves living in poverty, even with a basic income. Other individuals could find themselves in financial trouble, because of the high cost of pharmaceuticals or expensive dental work.

The current health care system should expand to include coverage for some of these things, especially in cases where the pharmaceuticals in question are life saving or have a serious impact of quality of life or where lack of dental care would create additional health problems.

Fortunately the proposed legalization of marijuana will help with the cost of some of this. According to estimates, legal pot will raise an additional $5 billion in taxes annually and Prime Minister Trudeau has already pledged to devote this money to mental health and addiction.

That is a substantial down payment on improving the health care system.

Education

Even with a guaranteed income, the cost of higher education would be prohibitive to many people. Even with student loan programs in place, high interest rates have many people questioning whether the benefits of higher education are worth the cost. Fortunately, there is a 21st century solution to this.

Currently  there are thousands of “Massively Open Online Courses” (MOOCs), and the list of available courses is growing by the week. Many of these are created by some of the worlds best universities. Students can take courses from Harvard, Yale, MIT, Oxford, Cal Tech, Cambridge, Stanford and hundreds of other universities in their spare time, whenever it fits into their schedule, without leaving the house. Most of these courses are free or very inexpensive ($100 or less).

To fully take advantage of this trend, I would create a University of Canada (UofC). This new "university" would begin by gathering a team of curriculum experts to evaluate these courses and organize them into degree programs. The UofC wouldn’t actually teach any classes, it would simply double check students performance in courses generated elsewhere and certify their knowledge. Any gaps might be filled in by contracting with existing universities to create new MOOCs.

In some cases, additional work or testing might be required to ensure students understanding of course material. In those cases, the UofC could hire graduate students at other Canadian universities on a part time basis to grade papers.

The University of Canada itself would be free. It could also help students to reduce the cost of attending other universities.

Debt

As added protection against uncertain times and each Canadian should have a $50,000, zero interest line of credit from the government. These funds, however, would only be available for personal advancement, emergency relief and to create financial stability.

Individuals could use the credit to fund higher education at a traditional university, but only at those universities that allowed the transfer of at least some University of Canada courses. This would boost enrolment at those schools while reducing the cost for students. Universities that did not recognize UofC courses would not be eligible for free student loans.

Additionally uses for the credit could include:

  • Continuing education, to help individuals advance in their careers and keep up with new developments. 
  • Funding training in the skilled trades and other job training outside of a university setting. 
  • Paying for relocation to increase an individuals chances of finding work in their field. 
  • Paying for emergencies such as a furnace breaking down in winter or repairs to a car needed for work. 
  • Paying for some prescriptions and medical procedures not covered by provincial health care

Individuals could also use up to 10% of the fund ($5,000) for the automatic payment of rent and monthly utility bills. This would ensure that payments were on time, preventing late fees and potential loss of service due to any cash flow problems. It would also put a sizeable dent in the parasitic “payday loan” industry.

This, BI+ is, in my opinion, what an individual tool kit for the 21st century can and should look like.

It doesn't put a ceiling on personal wealth, but it does establish a floor - a point below which individuals are not allowed to fall. (After all who builds a house and worries about the height of the ceiling when they didn't bother to put in a foundation?)

It doesn't destroy capitalism, it enhances it by allowing the poor and working poor to participate more and have additional choices within the system. It doesn't curtail freedom, it enhances it.

For example:

  • Want to start a new business? Go ahead. It might not succeed but you won't be destitute if it fails. 
  • Want to go back to school to pursue something you've always had a passion for? Go ahead, all the tools are there to do it without great expense and in whatever way fits with your schedule.  
  • Want to take some time off and write the great Canadian novel? Go ahead. Success isn't guaranteed and money may be tight, but you won't starve.
  • Want to cut back on work and spend more time with your kids? Go ahead. 
  • Unhappy with your local job prospects? Do some research and move to greener pastures. 
This enhanced personal, educational and financial freedom will create a freer society, an enhanced capitalism, a happier society and will allow each individual to reach their full potential. 

It will also enhance democracy and make government better. The BI+ system would be expensive, no doubt. It would be so expensive that politicians would no longer have much ability to "bribe people with their own money" at election time. They would not be able to offer tax breaks or benefits to one group over another, because the money wouldn't be there and the system is no longer set up for that. There are no tax breaks, no new benefits unless they apply to everyone. 

That also means that lobbying and campaign contributions would change. Government would no longer have the financial ability to favour one company or industry over others. Industry would certainly continue to lobby but with limits one what politicians could offer, the quasi-bribery of large campaign contributions would slow to a trickle. Voters would be left to choose candidates based on wisdom, experience and competence instead of choosing the candidate who offered them the largest slice of pie. 

There is no doubt that some would try to abuse the system. Some would try to defraud the system and Revenue Canada should create or invest in artificial intelligence systems to analyze data and detect fraud. 

Some people would simply sit back with their basic income and do nothing. That, traditionally, has been what bread resentment toward various welfare programs. However, BI+ is universal. Everyone receives benefits, and doesn't lose them if they go to work. That means that work is a choice and those who choose to work will benefit economically. If there are some who choose not to, for childcare reasons, for health reasons or simply because they don't want to, that's ok to. 

We are heading into an automated economy that could well see multi-billion dollar corporations with only a handful of employees. High unemployment rates will very likely become the norm rather than the exceptions. If there are people who want to sit on the bench, it will create more opportunities for people who want to get in the game. 

It will also provide a continuous economic stimulus that will keep recessions from turning into depressions. 

Is it a perfect system? No. Will it save every person and solve every problem? No, again. However, it is a simple approach that fits well with modern society, takes advantage of modern technology and solves a number of problems without adding any new ones. It would eliminate, or nearly eliminate poverty. It would make Canada a better, safer, healthier, happier, more prosperous, better educated and freer country. 

It would do all of this without attacking capitalism, threatening big corporations (most of them anyway) or "the 1 percent" (the usual boogey men of the left). And would do it without creating massive bureaucracy or big government (the usual boogey men of the right). 

BI+ would also, perhaps most importantly, provide Canada and Canadians individually with the stability and flexibility to make the most of what is certain to be a tumultuous, terrible and wonderful 21st century. 

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