Pandemic proves value of guaranteed incomes

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May 9, 2020

Pandemic proves value of guaranteed incomes

Written by Robin V. Sears for the Toronto Star. Click here to read the original.

Most major crises deliver changes that forever transform society. After the Second World War it was the build out of the social safety net, a process that continued for another 30 years in most of the developed economies.

Out of the pioneering work of the Atlee government in creating the National Health Service — based on the groundbreaking work of U.K. Liberal MP William Beveridge — then pension and labour reform, began a process that spread across Western Europe and North America.

With the arrival of monetarism, fiscal conservatism and governments focused more on serving the demands of the corporate world than those of their most vulnerable citizens, the process mostly stalled. Deep wealth inequalities grew, health systems began to sag under the strains of heavier demand and underfunding.

It is beginning to look as if this epidemic will have restarted the search for new ways to rebalance societies toward greater equality and social justice. For nearly six decades visionaries of left and right in North America and Europe have wrestled over how to deliver the next step to a more modern social safety net. The largest missing ingredient most observed was a secure income, not just for the elderly and the poorest, but for the working poor as well.

The core elements of most modern nations’ support systems include pensions, health care, employment insurance and a plethora of social assistance payments. In Canada, our pension systems are today well-funded and low cost to operate. They are beacons of good public sector management beside the alphabet soup of social assistance programmes, which are often poorly and arbitrarily administered. This crisis revealed several other deep systemic flaws.

Who knew nursing homes were so terribly funded and supervised before this crisis, that many were the killing floor for nearly four-out-of-five Canadian COVID-19 deaths? Who knew that meat packing had fallen back into some of the dangerous practices first revealed by Upton Sinclair’s “The Jungle” — his searing attack on the Chicago abattoirs — nearly 120 years ago. Who knew that so many millions of Canadians were ineligible for EI support?

Crises deliver important lessons. Two lessons of this crisis are that the Canada Revenue Agency showed itself to be just as good at dispensing cash as they are in collecting it. Secondly, the efficiency of the crisis support systems their smart young IT team established were breathtakingly fast and effective, in contrast to the creaky 60 year old computer systems of many “normal” government programmes.

We know that we will emerge from this crisis with higher levels of unemployment than we have seen in two generations. We should be prepared for a winter ahead into which millions of Canadians will be headed broke, unemployed and close to despair.

It was cash from Canadian governments that saved as many small businesses as it did. It was cash that kept students and gig workers and the laid off going. The CRA demonstrated its skill at matching cash with need through the tax system. Perhaps it is finally time to test the most important missing piece of the social infrastructure puzzle — getting cash to those who need it directly, unconditionally and reliably.

As Hugh Segal, one of the lifetime pioneers of a basic universal income puts it, before this crisis there were two major attacks on basic income. The first was it would kill the work ethic, which as he points out, none of the studies of pilot projects has ever found any evidence for. The second was sending money to people who didn’t need it, with a tax system that could not recover it from the wealthy.

The CRA appears to have solved the second issue inadvertently. By linking their regularly updated records of your income, they can also see when you fall below a threshold of need, triggering an injection of cash. So starting in the New Year, why would we not choose half a dozen different communities across Canada, small and large, remote and rural and begin a nationwide pilot project? Finland has already have done it and we could be schooled by their experience.

It might lead to the most transformational changes in today’s rich but increasingly divided and unequal economies since Bismarck invented the public pension system, nearly 140 years ago.