Some remarks on basic income and social democracy

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With a basic income, it wouldn’t be so easy for the Company to bully this crew into stirring up all that trouble on LV-426

I’ve been following with interest some of the pushback from the left on the idea of a basic income — especially in Ontario, where the long-awaited terms of a basic income pilot project were announced on Monday. The backlash has been building for some time, and in this post I’ll be reviewing a few important considerations that have been raised, jumping off from a critical piece by Michal Rozworski published last April.

Naturally, one of the biggest worries about basic income (equally applicable to any other scheme for abolishing poverty) is the matter of cost. As Rozworski demonstrates, however, costs are easily exaggerated. His estimated net cost for full blown implementation of a province-wide basic income program— $200 billion — assumes a $15,000 transfer to each person, regardless of age and other sources of income. However, the program piloted in Ontario will have a 50% phase-out rate for employment income (meaning that the basic income payment is reduced by 50 cents for every dollar earned from employment) and a 100% phase-out rate for EI and CPP income. It will only be paid out to Ontarians who are between 18 years and 64 years old (inclusive), and the base transfer for couples is smaller than the base transfer for two non-cohabiting individuals (the base transfer for couples is $24,027 as opposed to $16,989 for individuals). When Rozworski wrote this piece, neither the details of the pilot program nor Hugh Segal’s recommendations for the pilot’s design had yet been released. However, Segal’s recommendations didn’t come out of the blue; for the most part, they seemed to follow the dictates of common sense. This being the case, I find it puzzling that Rozworski devotes three paragraphs to discussing the relative cost of basic income programs under various different parameters without stumbling on any design that even remotely resembles Ontario’s pilot program.

Taking into account the specifics of the Ontario pilot program, Kevin Milligan — an equally sharp critic of basic income — has produced a more realistic figure, estimating the net cost of a province-wide basic income modeled on the pilot scheme at between $15-30 billion, equivalent to the revenue from raising the HST by 5-10 points. That is a very large tax hike, but even at the high end it would only bring the HST in line with the equivalent value-added taxes in the Nordic social democracies (25% in Denmark, Norway and Sweden, and 24% in Finland and Iceland). A basic income program would not be cheap, but it is fiscally feasible.

But even if a basic income is fiscally feasible, is it politically viable? Probably not in the near term. For proponents on the left, part of the appeal of basic income seems to be that it also attracts the support of some people on the right. To some extent, perhaps this is because a lot of people on the left are really demoralized these days; they feel like we on the left are the perennial losers, and those people on the right basically can’t lose. But I think Rozworski is correct to point out that the kind of basic income program that’s likely to attract support from the right is not the kind that deserves any support from the left.

From a social democratic perspective, there is a deep affinity between the justification for a basic income program and the justification for other elements of the welfare state. We grant that the market economy is very good for some things, but it’s not good for everything. The free market fails to deliver such things as effective universal access to comprehensive health care, high-quality basic education, and protection from natural and human-caused threats to our health and safety. Quite sensibly, therefore, we have government-funded health insurance and service provision, public school systems, and emergency services. For all its virtues, the market has proven equally incapable of ensuring that no one will end up in poverty. The natural conclusion is that the government ought to assume responsibility for what the market is incapable of doing, and implement a basic income scheme or something very much like it. But the reasoning that leads to this conclusion is fundamentally at odds with the goal of replacing any significant part of the welfare state with a basic income, and it cannot justify neglecting the protection and expansion of other worthwhile government programs. This shows, I think, that there is no alliance to be had between left and right proponents of basic income after all.

So a basic income worth wanting depends on the left making a strong case for it and organizing around that goal all on our own. The boast that basic income has supporters across the political spectrum strikes me as self-defeating, because this is only true of policies that are so vaguely defined that they cannot possibly begin to attract the real political support needed to launch such an expensive kind of social program. We should not exaggerate the associated costs, but we can’t pretend they don’t exist either. Nor can we be singleminded about pursuing this particular goal, neglecting more immediately achievable objectives such as increased welfare rates, universal childcare, and better drug coverage. This kind of narrow focus contradicts the logic that supports basic income in the first place; it also probably means passing up opportunities to build the kind of coalition that would be needed to successfully push through such an ambitious program.


3 thoughts on “Some remarks on basic income and social democracy

  1. Pingback: Responses to concerns from the left about basic income | Popcorn Machine

  2. Pingback: Referendums vs. democracy: tax policy edition | Popcorn Machine

  3. Pingback: A brief response to Daniel Zamora on basic income | Popcorn Machine

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