Trudeau’s Liberals Should Follow Their Own Advice and Give Poor People Money

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When the Liberal party held its policy convention in Montreal late last month, most of the actual policy got drowned out by Justin Trudeau’s empty speeches and the rapturous applause they received. But among the (non-binding) resolutions party members passed that weekend was a proposal that could significantly improve the lives of millions of Canadians if it ever becomes law: a guaranteed minimum income.

The idea is pretty straightforward. About one in ten Canadians is living below the poverty line, which was about $20,000 for an individual in 2011. With a guaranteed minimum income, the government would see who isn’t meeting that level in their income taxes and just pay them the difference.

While just giving money away to poor people may sound like a tough sell, it shouldn’t be. Existing efforts to fight poverty are a patchwork of inefficient tax credits, rebates and charity. It may sound crazy, but just topping up people’s bank accounts, on the other hand, solves the problem in one fell swoop.

In fact, the economic benefits may be greater than the costs.

Kelly Ernst, chair of the Basic Income Canada Network, a non-profit group pushing for a minimum income, says it would “not only help Canadians on an individual basis but it would also save the country lots of tax dollars.”

According to research by the Ontario Association of Food Banks, the price of poverty in Canada each year is between $72 billion and $86 billion in health care, criminal justice and other social costs. That’s enough to raise everyone out of poverty if we wanted to.

“And if people aren’t worrying about the basic everyday necessities, they also become more engaged citizens,” Ernst said from Calgary when I reached him by phone.

While there are variations on the idea, also known as a negative income tax, the point is to let the poorest among us spend less time worrying about bills and putting food on the table and focus more on raising their kids, learning new skills or—hell—going to the movies, if that’s what they want to do. In the end, it all goes back into the economy and lets people contribute to the greater wellbeing of the country.

“It’s not a tough sell actually when you talk to people and they realize some of the benefits,” Ernst said. “The problem is, in Canada, we haven’t really discussed it. We need a public education campaign, as well as discussion among policy makers to examine the issue seriously.”

Now that the Liberals have taken some baby steps toward such a policy, perhaps it can be seriously considered. The NDP have also considered it at various times and, in the Conservative ranks, Ontario Senator Hugh Segal has been flogging the issue for a long time.

There are numerous countries where cash transfers have proven not only effective, but popular. The most prominent examples come from the Global South, such as the Bolsa Familia program in Brazil where it has been credited with helping to bring millions of families out of poverty over the last decade.

“These millions of people who get the Bolsa Familia are people who are spending here in Brazil. This money multiplies the GDP. We want them as consumers, as part of the country. And as workers,” Tereza Campello, Brazil’s social development minister, told the Globe and Mail in December. “Brazil needs these workers. So we are not doing this just for social assistance. We are doing this because we believe it’s good for the country.”

Could an idea from the developing world take root in a rich country like Canada? The thing is, Canada already has a history with such schemes. The biggest success is in Canada’s rate of elderly poverty, which is among the lowest in the OECD thanks to programs like Ontario’s Guaranteed Annual Income System.

But the most interesting example of a guaranteed minimum income in Canada was a pilot project in Dauphin, Manitoba, which ran for five years in the 1970s before funding dried up. For some reason, nobody really studied the results of this “Mincome” program until just a few years ago, when Evelyn Forget, a University of Manitoba researcher looked over the data and saw an 8.5 percent decrease in the rate of hospitalization, as well as better education and job training compared to another Manitoba town of a similar size that acted as the control.

It was also in the 1970s that another Liberal leader named Trudeau was weighing the pros and cons of instituting a guaranteed minimum income, as the Toronto Star’s Carol Goar recounts, but Pierre decided he couldn’t “bring everyone over the poverty line by giving them part of the taxpayers’ pocket.”

In the United States, it was Richard Nixon in 1969 who tried to pass a basic income guarantee into law, but he was stymied by Senate Democrats who thought the program was too limited in scope. Of course, such a thing would be unfathomable nowadays, especially originating with any Republican leaders. It was Ronald Reagan who stoked class and racial resentment with his attacks on “welfare queens” and the GOP has maintained that attack on the poor ever since, continuing to divide people into “makers” and “takers.”

Unfortunately, some of that mentality has migrated north, and although Occupy Wall Street re-introduced the concept of economic inequality into political discourse, politicians still fetishize the mythical middle class while almost never mentioning the poor. As Canada heads into a prolonged campaign season ahead of the 2015 federal election, now is as good a time as any to re-introduce poverty into the discussion.

The idea isn’t without its detractors. Two common worries about a guaranteed minimum income are about fairness and whether people will use the money properly. After all, we tend to think people should work for their money, but as the Mincome experiment in Manitoba showed, most people who had jobs didn’t suddenly quit to accept public funds. In fact, it is often existing welfare programs that often discourage people to work, creating a “welfare trap” that makes it easier to stay on the dole than to take work for less money.

As for whether people will blow all the money on booze and smokes, that also isn’t borne out by the evidence. Most people need food and clothes more than they need Johnnie Walker–although if people want a drink every now and then, who cares? We have to decide if we want to end poverty, or if we want to be paternalistic. Being poor isn’t a stain on your moral character; it just means you don’t have enough money.  @ID4RO