Canada considering universal basic income

 

I came upon this tweet the other day to learn that the Senate Finance Committee is looking into a bill (S-233), An Act to develop a national framework for a guaranteed livable basic income, aka, guaranteed annual income (GAI) or universal basic income (UBI):

Canada to implement a universal basic income of $2,000 per month.

It doesn't matter how much money you make; you will be eligible for $2,000 per month.

"This is pretty crazy"

"This will be an influx into the economy that will be highly inflationary"

"We all remember what… pic.twitter.com/4uIlbZV9d1

— Wall Street Silver (@WallStreetSilv) December 26, 2023

Can this be a good, sound idea?

A GAI or UBI broadly refers to a cash transfer from government intended to ensure a minimum level of income for everyone. A universal basic income specifically gives everyone a flat cash transfer, regardless of their level of income.

In this case, it's for everyone in Canada over 17.

If enacted, what would be the price tag? According to a 2020 report from the Canadian Fraser Institute, which analyzed the costs of a UBI based on the $2,000 monthly benefit provided by the Canada Emergency Response Benefit (CERB) program. If all Canadians aged 18 to 64 received annual payments of $24,000 with no strings attached, the annual price tag would reach $465 billion. For perspective, consider that the entire federal budget in 2019-20 including interest on the national debt was $362.9 billion.

About $100 billion more than all federal spending.

Proponents claim that the UBI would be an efficient replacement for the country’s bloated welfare apparatus, and so would actually reduce overall costs.

Unfortunately, a welfare state by any other name is still a welfare state. And the UBI is just replacing one pricey system for another. And unlike the current welfare state, which has standards for determining who qualifies for certain aid, a UBI would be given to everyone. This would dramatically increase the pool of citizens receiving benefits from the state and inflict massive expenses across the board.

Public opinion and social psychology indicate that adopting policies with a demonstrated track record of discouraging work would be a bad development.

Policy should be designed to reward work rather than replace it.

Evidence from the negative income tax experiment, which ran from 1968 to 1980, strongly suggests that a comprehensive universal basic income program would significantly reduce work and increase dependency.