Basic Income Guarantee: A Surprisingly Cost-Effective Method for Eliminating Poverty

15th July 2016

Contributing writer for Wake Up World

Between 1974 and 1979, a radical experiment was taking place in a small Manitoba city that has all but been forgotten. Yet the result of the Canadian program is nothing short of astonishing: for those five years, poverty was utterly eradicated. The secret? Providing a basic annual income for everyone — no strings attached.

What might sound like a capitalist’s nightmare — People wouldn’t work… They would become lazy and a burden on society… The free-market would be destroyed! — turned out to be an incredible success without issue. But when a Conservative government came to power provincially in 1977, and 1979 federally, the program was dismantled and seemingly lost to the archives of societal experiments — until now.

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History of the basic income

The idea of a basic income has its roots as far back as the 15th century. Thomas More (1478-1535) points out in his book Utopia that a minimum income guarantee by the government would be a much more efficient way of deterring theft than sentencing thieves to death. He writes: “No penalty on earth will stop people from stealing, if it is their only way of getting food. It would be far more to the point to provide everyone with some means of livelihood.”

More’s close friend and fellow humanist, Johannes Ludovicus Vives (1492-1540) took the idea a step further by working out a detailed scheme for it, supported by solid theological and pragmatic arguments.

Even Thomas Jefferson was an advocate for helping those less fortunate with the first homestead program in 1776, giving property-less individuals 50 acres of public land to farm. In 1862, Abraham Lincoln expanded the program by granting 160 acres to any head of family 21 years or older who agreed to stay on the land and cultivate it for at least five years. Some 720,000 homesteads were established under his National Homestead Act of 1862.

Thomas Paine also supported the idea. In 1795 he proposed a national fund to pay every person at the age of 21 fifteen pounds sterling “to enable him or her to begin the world!” Moreover, he advocated 10 pounds sterling annually for those over the age of 50 “to enable them to live in old age without wretchedness, and go decently out of the world.” Every person, whether rich or poor, healthy or disabled, would receive the payment. It is “a right, and not a charity, that I am pleading for.”

Paine believed the funds should come from a “ground-rent” to be paid by property owners. He felt this was fair because the earth is “common property of the human race” and should be shared among all. Agrarian justice, opposed to agrarian law and/or monopoly, would be served in this way, shared as cash for those who had no land.

Throughout history, many others have taken up the torch for a basic income — in one form or another — including Bertrand Russell, Franklin Roosevelt, F.A. Hayek, Milton Friedman, Erich Fromm, Martin Luther King Jr., Margaret Mead, Jimmy Carter, Jeffrey Smith and more. You can read the full history here.

Ontario slated to provide basic income to residents this fall

Jump to the present and a basic income pilot project is once again on the books in Canada. Buried in the latest approved Ontario budget, a small paragraph could mean big changes for the most impoverished residents of the province.

Those who support the program believe raising families above the poverty line would be more efficient and cost-effective in the long run, compared to overseeing a variety of social programs that are already in place for low-income residents. Since poverty is also strongly linked with poor health, a guaranteed minimum income could lower health related costs. “Poverty costs us all. It expands health-care costs, policing burdens and depresses the economy,” said Senator Art Eggleton while promoting the project.

Approximately 9% of Canadians are considered at or below the poverty line, but single mothers and indigenous communities have a much higher ratio.

According to Danielle Martin, vice president of Women’s College Hospital in Toronto, if the basic income pilot project is approached correctly, “we can actually have a major impact on the health outcomes for some of the most vulnerable people in the province, and that can save tremendous amounts of money in the health-care system down the road.” She also believes that the program will provide much needed income security, but won’t discourage people from entering the workforce.

If the pilot test-run in Ontario is anything like the 1970 Dauphin, Manitoba experiment, Martin will be proven correct.

Researchers found that the Dauphin program did not discourage individuals from working — except for two groups: new mothers and teenaged boys who stayed in school until graduation. It was also responsible for a 8.5% reduction in hospital visits throughout the experiment.

“People had fewer visits because of mental health problems,” said Martin. “There were fewer low birth-weight babies, so very concrete and immediate impacts in terms of people’s health.”

Still, critics are afraid of what is called a “welfare wall,” where people are actually better off staying on social assistance instead of finding low-pay work, which makes it nearly impossible to get off welfare.

But proponents say a guaranteed minimum income is far from living on easy street. “It would provide a floor, a foundation that low-income people can then build upon for a better life, said Senator Eggleton. He adds, “Social programs should lift people out of poverty, not keep them there, and a basic income is a new approach that could work.”

Federico Pistono: Basic income and other ways to fix capitalism | TEDxHaarlem

Article sources

About the author:

Carolanne Wright enthusiastically believes if we want to see change in the world, we need to be the change. As a nutritionist, natural foods chef and wellness coach, Carolanne has encouraged others to embrace a healthy lifestyle of organic living, gratefulness and joyful orientation for over 13 years.

Through her website Thrive-Living.net, she looks forward to connecting with other like-minded people from around the world who share a similar vision. You can also follow Carolanne on Facebook, Twitter and Pinterest.

Further reading from Carolanne Wright: