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Guaranteed income’s dangerous outcome

By: 
John Bell

May 30, 2016

The Ontario Liberal government of Kathleen Wynne is talking about a guaranteed basic income for all residents. It sounds great; in fact it sounds too good to be true.

Will this be a radical reform to alleviate, if not eliminate, poverty? Or is it a new way to funnel public money into corporate pockets? The problem is that guaranteed income could be either, depending on the economic context, and depending in whose interests the scheme is designed.

For example, the fossil fuel industry has been receiving a guaranteed annual income for decades. In 2014 the Bolsheviks at the International Monetary Fund estimated that the oil industry in Canada received about $34 billion each year, in the form of direct subsidies, trade bonuses and tax breaks. (The same report pegged the fossil fuel industry around the world pocketed almost $2 trillion in guaranteed annual income from governments.

But I digress.

There are a number of very different models of guaranteed annual income (GAI) out there, and there are proponents on both the right and left. In Canada, most GAI proposals have come from the right and, importantly, at times when capitalism is experiencing crises.

GAI history

In the 1930s the theory of Social Credit was put forward in Alberta by Premier William “Bible Bill” Aberhart and, after his death, Ernest C. Manning (father of Preston Manning). The idea was to redefine citizens as consumers and give them a fixed amount of credit to buy goods and social services. In practice Social Credit governments in Alberta and BC did not institute GAI, but functioned as conservative governments with populist rhetoric.

Talk of GAI resurfaced in the late 1970s and early 1980s, as falling rates of profit, rising inflation and the so-called oil crisis threatened the economy. (This was also the period when Pierre Trudeau’s Liberals imposed wage controls).

In 1985 the MacDonald Commission on economic policy–begun by the Liberals but finally reporting to the Mulroney Conservatives–proposes a Universal Income Supplement. This was to have replaced virtually all social services, from welfare to health care.

The labour movement, though far from radical, was stronger then than now. The Canadian Labour Congress strongly opposed the proposal, arguing that any GAI plan had to come with a strengthening, rather than elimination, of social services and protections for workers.

The plan was shelved, but unfortunately other recommendations of the MacDonald Commission—greater economic “flexibility”, free trade deals and the first attacks on social services—were acted on.

So here we are again; capitalism is in real crisis and position of workers is more precarious than any time since the 1930s Depression years. Technological revolution, the Uberization of work, threatens workers in a number of economic sectors. And once again the loudest voices calling for GAI are on the right. GAI is all the rage among the Ayn Randists of the Silicon Valley—home of Uber and airbnb.

In a recent Guardian article, Evgeny Morozov described the disconcerting enthusiasm for GAI among high-tech billionaires:

“First, there is the traditional libertarian argument against the intrusiveness and inefficiency of the welfare state—a problem that basic income, once combined with the full-blown dismantling of public institutions, might solve. Second, the coming age of automation might result in even more people losing their jobs—and the prospect of a guaranteed and unconditional basic income might reduce the odds of another Luddite uprising.

“Basic income, therefore, is often seen as the Trojan horse that would allow tech companies to position themselves as progressive, even caring—the good cop to Wall Street’s bad cop—while eliminating the hurdles that stand in the way of further expansion.”

Privatization

The price tag for this model of GAI would be complete elimination of our social services safety net, full privatization of education and health services, and elimination of government regulation of industry. And as a bonus, the plan would further weaken the labour movement.

What more could an uber-boss ask for?

The goal of such a scheme is not to end the obscene and growing disparity between between the 1% and the rest of us, but to perpetuate it.

No doubt Wynne won’t go as far as the Princes of Silicon Valley would like, but this is a government hell-bent on selling off and privatizing public assets like Ontario Hydro. And if the Liberals were concerned about easing poverty, they would raise the minimum wage to $15. The current minimum wage of $11.25 is set to go up to $11.40 in October—far below the poverty line.

Read this clause from Wynne’s most recent budget document, regarding the planned GAI pilot project: “The pilot would also test whether a basic income would provide a more efficient way of delivering income support, strengthen the attachment to the labour force, and achieve savings in other areas, such as health care and housing supports.”

Instead of social housing for the poor, a voucher to pay the landlord? Vouchers for health services, for day care, for schools? The Liberal track record doesn’t bode well.

Karl Marx wrote about a real GAI when he described a system that provided for all, “from each according to his ability, to each according to his needs.” I’d be all in favour of a GAI that began with the needs of working people. But what we’ll get will be based on the needs of bosses and corporations—guaranteed income with a bad outcome.

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