Could universal income be a better option than welfare?
The Canadian government recently announced that people living in the province of Ontario could soon receive an allowance each month as part of a trial for a universal basic income law the government plans to implement this year.
The government hopes that by giving its citizens a set amount of money regularly, the general standard of living will go up, particularly for those who don’t qualify for government payments or the welfare system, like stay-at-home parents.
"As Ontario’s economy grows, the government remains committed to leaving no one behind," the government wrote in a budget statement. "Maintaining an effective social safety net is one part of the government’s broader efforts to reduce poverty and ensure inclusion in communities and the economy."
As of now, it isn’t specified in the budget statement who will qualify for the added basic income, how much the income will be, or what restrictions will be put in place, but the government says it plans to work with researchers, communities, and other stakeholders in 2016 to “determine how best to design and implement a Basic Income pilot.”
The government hopes a basic income could “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,” according to the statement.
Canada isn’t alone in the attempt to trial universal income instead of welfare. Other countries are also in the midst of trialing similar projects (or have already completed trials), including Finland, France, India, and the Netherlands.
At face value, universal basic income can seem illogical — why give money away instead of encouraging people to work for it?
However, the current welfare models are deeply flawed. Statistics show that one in five children in Ontario face poverty, and in the United States, 21.1 percent of children were living in poverty in 2014, according to the US Census Bureau.
The Census Bureau also reports that the official poverty rate for 2014 was 14.8 percent, or nearly 47 million people living in poverty, and that neither the poverty rate nor the number of people in poverty were statistically different from the 2013 estimates.
A popular saying states that “the definition of insanity is doing the same thing over and over again, but expecting different results,” so perhaps trialling a new model to replace welfare is at least worth a shot.
Back in 1974 to 1978, a Canadian town called Dauphin tried out a pilot project for basic income, and results showed that poverty was significantly reduced as well as the government’s costs for hospital visits and mental health-related issues in the town.
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However, there are plenty of arguments against a basic income for all citizens. If people are handed free money from the government, what’s the incentive to work hard to earn it?
Indeed, the trial in Dauphin showed that work hours did decrease during the five-year period. However, the reduction in work hours wasn’t necessarily all bad — men spent more time in school and women opted to stay longer on maternity leave, so there were benefits in other ways than the workplace.
Plus, the effects of a universal basic income can differ in various places around the world. A similar trial in Uganda showed that working hours increased by 17 percent and average earnings increased by 38 percent.
When it comes down to it, universal basic incomes may thrive in some places around the world but turn out disastrously in others, but like with most things in the world, it takes trial and error in order to figure out what works.