A UNIVERSAL BASIC INCOME
If you know someone who is unemployed, underemployed, or without job security, you may want to look into an idea whose time is coming: the idea of a universal basic income or UBI. Polls have shown that a majority of the general population in a number of countries find themselves unable to accept the idea of a UBI. Raised to revere the work ethic they fear that a UBI, if set at a level to permit a decent life, would reward idleness and create legions of free riders. The fact that empirical studies undertaken in Canada and the U.S. suggest that the incentive to work is not significantly weakened by income security hardly seems to make a dent in such entrenched attitudes. These attitudes often find expression in the phrase, “I don’t believe in handouts.”
It’s essential to understand that a UBI in no way rules out full-time, adequately paid employment, but rather softens the loss of its availability to all. A UBI provides the security of a bare living. Moreover, if it could be shown that the well-to-do receive “handouts”—although they’re not called handouts, and they take forms that disguise their true nature even from most of those who benefit from them—far in excess of anything describable as a UBI, would you be prepared to reconsider your opinion? On what basis would you deny to the poor what society unquestioningly, though without fully understanding, grants to the rich?
At http://www.basicincome.com you will find the case for a UBI, as well as a summary of the simple UBI model for Canada presented in the book Basic Income: Economic Security for all Canadians by S. Lerner, C. M. A. Clark, W. R. Needham, 1999. You will also find a fact sheet entitled ‘Canadian Economic Data.’ A study of this data should convince you that the rich receive very generous handouts indeed (courtesy of tax loopholes and, more subtly but more importantly, the system of money creation known as fractional reserve banking).
The English journalist G. K. Chesterton said that too much capitalism doesn’t mean too many capitalists, but too few capitalists. Unregulated capitalism and state socialism are twin blunders, capitalism because it concentrates wealth in the hands of the few thereby undermining democracy, and socialism because it concentrates power in the hands of a class of state officials who proceed to appropriate the lion’s share of the meagre output of a socialist economy for themselves. Of the two systems capitalism is infinitely preferable, firstly because the chief safeguard of personal freedom in a democratic society is the anarchy and disorder of capitalist individualism, and secondly because capitalism produces so much more wealth. Nevertheless, the great and growing economic inequality in the world today, both within nations and among nations, should be seen as a very dangerous ongoing crisis. But we must be very careful to avoid the blunder of blaming the rich instead of the true culprit—human nature. We have no reason to suppose, if rich and poor could trade places, that the poor would behave any better. They might well behave worse, as commonly happens when the exploited suddenly find themselves in a position to exploit. No, the rich take full advantage of the fact that our economy and tax system are organized and managed to their advantage—most of them don’t lose a moment’s sleep over it either—because that’s a very human thing to do. It was ever thus, and it’s a sign of maturity not to be scandalized by it.
Capitalism is based on the principle of competition. People must work hard in order to succeed. But many people, through no fault of their own, are ill-equipped to live in such a competitive world. If we think it wrong to discriminate on the basis of race, creed or colour, why do we tolerate economic discrimination on the basis of energy, academic aptitude, or the motivating desire for wealth? It’s up to the victims of our economy, and their sympathizers in the middle class, to point to the obvious injustice in much of modern economic practice, as well as to the historic change underway in the nature of work. Though it may be delayed the day is coming when our society will agree with John Kenneth Galbraith, ‘Everybody should be guaranteed a decent basic income. A rich country…can well afford to keep everybody out of poverty.’
THE CASE FOR UNIVERSAL BASIC INCOME
- While some new types of jobs are emerging, it is a myth that in developed societies such as Canada secure, adequately paid employment is available for all. Therefore the risks of fragile work should be socialised rather than being borne increasingly by the individual.Headline: STUDY PAINTS BLEAK JOB SCENE IN CANADA: JOBLESS FIGURES DON’T MEASURE UNDEREMPLOYMENT, REPORT CONTENDS
Canadian workers are underpaid and underemployed, says a report released yesterday by Ryerson Polytechnic University. The study, conducted by the Ryerson Social Reporting Network, observes that 52% of Canadians are paid less that $15 an hour, and that 45% of the country’s workforce is engaged in “flexible” work, with people unable to find full-time or permanent jobs… The Ryerson study estimates that as many as 20.3% of Canadians are underemployed or otherwise lack employment security and an adequate level of wages.
The National Post (June 3,1999)
1. Politicians praise training together with some type of on-the-job experience as the ultimate cure for unemployment and poverty. Bureaucratic insiders laughingly call this the “field of dreams” solutions – train the people and the jobs will come! Training may be the key in the short term for matching suitable people and some types of jobs, such as those that involve the latest high-tech skills or hands-on personal service. But there is some suspicion, even among those responsible for designing and implementing each new round of skills training, that over the longer term the hottest job market to emerge may be for job trainers.
- It is a violation of human rights to stigmatize and penalize people who cannot find enough paid work to support themselves and their families, and to participate fully in community life.Article 25 of the Universal Declaration of Human Rights states: Everyone has a right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.
- There is no real moral or socially viable alternative to some form of UBI if society cannot ensure secure, adequately paid jobs for all who want them.
- If a few people withdraw from the competition for jobs, this will benefit rather than damage society, since there are not enough jobs to go around anyway. A UBI would make this possible.
- For people with no post secondary education or training, the prospects for earning an adequate living are especially bleak. A UBI would reduce the discrimination experienced by those with low academic aptitude.
- Since we cannot continue growth that degrades the environment, employment should no longer be tied mainly to production for the market. A UBI is needed to prevent a win-lose polarization of society and avoid creating a permanent underclass during this fundamental transition.
- “Economic democracy” requires that all citizens have sufficient resources to make uncoerced economic decisions. This requires a UBI so people can turn down undesired jobs.
- A UBI facilitates the growth of different kinds of useful non-market work and of productive time for personal development; both activities complement paid work in the era of the flexible workforce. The fact that more people will choose to study or pursue idealistic or artistic endeavours will benefit society in the long run.
- A UBI maintains consumer demand in the face of unemployment, part-time employment and inadequate wages.
- A UBI substantially reduces transaction costs and increases transparency by allowing most of the complex and costly welfare bureaucracy to be dismantled.
- The earth and its resources (as well as such achievements of humanity as the wheel, the mother tongue, the decimal system, etc., which have made so much wealth creation possible) are the common heritage of all mankind. Therefore everyone has a right to a share in this heritage in the form of a UBI, financed from the wealth created by those who have made use of these resources.
- An UBI is best adapted to an economy in which knowledge has become the main productive force.
- Canada needs a UBI because no social responses currently under serious discussion in Canada are fully adequate to deal with long-term structural unemployment, underemployment and the private sector’s insistent demand for a flexible workforce.
“Handouts” to the Wealthy
THE TAX SYSTEM:
The principle of a progressive tax system holds that the level of taxation should be related to the ability to pay. In 1998 the average Canadian family paid total federal and provincial tax of $12,490 or 20.1% of its income. If our tax system was progressive in practice a family with income over $300,000 would pay more than 20.1%. In fact, families with income in excess of $300,000 paid, on average, 14.4%, or 5.7% less than the average family. Even with a flat (i.e. non-progressive) tax this amounts to a handout of $17,100 per family (i.e. 5.7% of $300,000).
FRACTIONAL RESERVE BANKING:
In 1984 Statistics Canada found that the richest 20% of Canadians held 75% of the nation’s financial wealth (stocks, bonds, etc.). A more recent survey found that the richest 1% now hold 40%. Let’s take 75% as a reasonable current estimate of the financial wealth held by the richest 10% of Canadians. As of 1999 Canada’s chartered (i.e. private) banks have created – out of thin air please note – about 95% of our money supply ($557 billion) as debt, otherwise known as bank credit. The interest on this debt is at least 6% every year. If we assume that those banks are 75% owned by the richest 10% of Canadians, it follows that our government, by allowing privately owned banks to create most of our money supply under the fractional reserve system of banking (see `Fractional Reserve Banking or Usury’ under General Economic Data), paid or “handed out” $25 billion to well-to-do Canadians (6% of 75% of $557 billion). Although the banking class would never admit it, this amounts to a $8,300 ($25 billion divided by 3 million well-to-do Canadians) “handout” for every man, woman and child in the richest 10% of the population.
It should be understood that the public debt (federal, provincial, and municipal) is overwhelmingly owned by wealthy individuals, both Canadian and non-Canadian. The interest paid ($77 billion in 1998) on this public debt, not to mention the interest paid (?) on private debt is the consequence of having a debt economy, i.e. a system by which private corporations called banks create about 95 percent of our money supply in the form of interest-bearing bank credit. Now, allowing banks to create a nation’s money supply is neither an economic necessity nor an enlightened social policy. Could we not then consider those debt payments as a disguised “handout,” a sort of tribute paid to the financial elite that has been built into the economic organization of modern societies so skillfully that it is rarely detected, much less questioned? We think that you can, in which case the handout in question amounts to (using our earlier assumptions) $57.75 billion (75% of $77 billion), or $19,250 ($57.75 billion divided by 3 million well-to-do Canadians) for every man, woman and child in the richest 10% of the population. That’s quite an impressive handout. Of course there’s private debt too, but we won’t belabour the point.