Universal Citizen Income: The Way Forward

This blog is a reposting of Cormac Russell’s contribution to Axiom News on February 11th 2016. You can see the original article here.

Curator’s Note: The Basic Income Guarantee conversation is heating up in Canada (Click here to read an Op-Ed published today in the Toronto Star titled, “The stage is now set for a basic income for all.”). We’re grateful to Cormac Russell for shedding light on this issue from both an historical perspective and through the lens of asset-based community development, a field in which he is a respected thought leader and active practitioner.

When governments value people they find creative ways of making people even more valuable in their local economies and communities. In turn, people return the compliment by contributing to the building of stronger local economies.

When governments do not value people they inadvertently create systems that stifle inventiveness and trap people in cycles of state dependency and long-term unemployment.

The Servicemen’s Readjustment Act of 1944, known informally as the G.I. Bill, is widely (across all political spectrums; around the world) considered one of the most successful pieces of legislation ever passed. It made provisions that effectively created ‘bonds’ to enable low-cost mortgages, low-interest business start-up loans, cash payments for educational return at all entry points, as well as one year of unemployment benefit for returning servicemen. Canada saw similar results for its programs of support for Second World War veterans. Few would argue that this investment in the human capital of service men and women in turn contributed enormously to the overall wealth of both nations to this day.

At the core of both pieces of legislation was the recognition that citizens are the primary inventors of a better tomorrow. Veterans were valued, and so the way benefits were given to them made them of value to their local economies and communities. In turn, veterans were able to contribute to growing the future economies of the U.S and Canada at their own pace and in their own way.

The central role of a democratic government is to support citizen-led invention, most certainly not to stifle or do harm to it. That support can come in many forms, and wealth re-distribution is by far the most important. Needless to say, welfare states are also meant to provide a safety net for those who need support. The G.I. Bill reminds us that these two objectives should not be split apart; instead, in good public policy they become mutually reinforcing.

Many welfare systems provide a safety net as a base line, but that net has become flaccid. Many poor people in receipt of “benefits” complain such systems have unwittingly contributed to cycles of multigenerational unemployment. Such systems, in managing public scrutiny and political criticism, have often been forced to provide very prescriptive, and at times punitive supports. Predefined progression pathways that people have not chosen, with high levels of stigma and red tape, have become common features of many of these systems.

Another feature of many of the current welfare systems is that significant amounts of money intended to end poverty does not go to the poor. Common sense tells us that the best way to address poverty is by increasing the income of poor people. Yet in nearly all Organisation for Economic Co-operation and Development countries less than one-third of monies intended for the poor go to them in income; the rest goes to professionals who provide palliative programs and oversight of how the poor are spending their benefits.

The contrast between both approaches to the provision of social protection is stark. What’s really going on? I believe this difference is best understood by contrasting how we valued G.I.’s at the end of the Second World War, and how (in general terms) we value poor people today. For the former, money was given directly; they were treated like citizens in an economy who needed support to contribute their gifts. In the latter, the money goes to paid helpers’ poor people are treated like passive clients with deficits, who are taking something from the economy.

In both instances, the people involved are fundamentally the same; what is different is the way in which society is treating them. Basic Universal Income (also referred to as Basic Income Guarantee) in Canada would disrupt that in a most innovative and impactful way. It would pole-vault over the ideological mine field that has blocked reforms in welfare states around the world, and bring significant change not just to poor people, but to everyone. That said, there continues to be a need for other strands of the welfare system to support people in a range of different ways, from personal budgets, to the provision of essential services, etc.

Still, in modern politics, there is little fundamental difference between the left and the right when it comes to their attitude towards “poor” people. It seems to me that they are broadly agreed that poor people are incapable of self-determining their own futures. Their only point of disagreement is on why and what to do about it. The left veers toward rescue and the stock provision of predefined services, the right from the time of Bismarck (who was the first to introduce a welfare system to quell public unrest, and maintain imperial power) toward provision with clear boundaries and strong sanctions for abuse of state generosity.

Feb23 blog_01What would happen if we gave people the basic resources (income) to live above the poverty line and to make their own choices about how to live their own lives? Well, we know the answer already. The experiment has already been done, and the results are worthy of salute. As we contemplate the pros and cons of Universal Basic (Citizen) Income (or Basic Income Guarantee), let’s remember that most of the people from America and Canada who fought in the Second World War were young and poor, so we also know what can happen when the gifts of low-income individuals and communities are liberated. Universal Basic Income is one way of doing this, and in fact may be the best way, certainly current experiments around the world offer us very good reasons for optimism.

The more controversial question will of course be: How are we going to pay for it? That’s for another blog, but I feel sure in saying that if a nation sees value in treating its citizens in this manner, then methods of taxation can be adjusted to align with those values of wealth redistribution.

In reading the tea leaves I suspect Universal Basic Income will win the day because it is neither left nor right, but forward moving, and so in my mind it exemplifies an asset-based approach to wealth distribution, with a strong evidence base already behind it.

Cormac Russell.

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