From pipe dream to prospect: the pandemic is making a case for a universal basic income

As every schoolchild knows, it was the First World War that brought Canadian women into the workplace (though of course, they had always been working). Even after the men returned from the front, women continued to work — and what was a temporary change turned into a new societal norm.

The Great War left us with another supposedly temporary measure: income tax. "I have placed no time limit upon this measure," said then finance minister Thomas White in 1917. "A year or two after the war is over, the measure should be reviewed."

We all know how that turned out.

Like governments around the world, the Trudeau government has used the rhetoric of wartime to describe the fight against the novel coronavirus. Wars and pandemics sometimes bring with them economic measures that would be unthinkable in normal times.

For proponents of a universal basic income (or UBI), governments' responses to the pandemic offer a moment of opportunity — and of vindication.

A way to buy time

"I think the coronavirus has exposed some of the problems with the economy that have led to this movement from the beginning, and it's going to accelerate them," said Floyd Marinescu, CEO of software learning company C4Media and a founder of the basic income lobby group UBI Works.

Marinescu said the pandemic is driving a new wave of industrial automation as companies try to function without workers.

"Six million Canadians have been suddenly thrust into what is effectively a basic income program and they're seeing that it works for what it's meant to do — something to fall back on and give you time to figure out what you're going to do next in a way that's more dignified and avoids the stigma and inefficiencies of applying for social assistance," he said.

"I think now we have a chance with basic income to have a shorter recession and a more inclusive recovery that helps everyone adapt to the new reality."

A papal blessing

On Tuesday, Pope Francis became the latest public figure to embrace the idea of a universal basic income, calling it a "change that can no longer be put off."

In his annual "letter to popular movements" he addressed those "who are informal, working on your own or in the grassroots economy, you have no steady income to get you through this hard time ... the lockdowns are becoming unbearable.

"This may be the time to consider a universal basic wage which would acknowledge and dignify the noble, essential tasks you carry out."

Already, one country that has suffered disproportionately from the pandemic appears to be headed in that direction.

Spain's governing Socialist Workers Party has seized on the pandemic to make changes it normally could only dream of — including the public takeover of private hospitals.

Some of those measures might be reversed once the viral threat fades. But Finance Minister and Deputy PM Nadia Calvino said her government sees its new UBI program, the ingreso mínimal vital, as something "that stays forever, that becomes a structural instrument, a permanent instrument."

Here in North America, the idea of a universal basic income was the driving force behind the surprisingly strong campaign of political outsider Andrew Yang for the Democratic presidential nomination.

His proposal that the U.S. government send monthly cheques (he called them "freedom dividends") to all or most American adults has, because of the pandemic, temporarily become official government policy.

Yang proposed $1,000 cheques. This week, the U.S. Treasury delivered $1,200 cheques to millions of Americans — although the rollout was hampered by glitches and by Treasury's move to put President Donald J. Trump's signature on every cheque.

Same solution, different problem

Yang's proposal, of course, had nothing to do with disease and everything to do with the decline of America's manufacturing base. For years, the main argument for UBI has been that automation will only accelerate the disappearance of solid blue-collar jobs and their replacement with low-wage jobs that don't provide the stability necessary to raise a healthy family, or create a healthy society.

The anger and fear that loss of stability produces (so the argument goes) leads people to turn away from democracy and embrace demagogues — so it's in everyone's interests to keep people from slipping into desperation.

The idea had been slowly gaining support in some quarters for years. Then COVID-19 hit, wiping out in mere weeks more jobs than had been lost to years of automation and outsourcing.

"What seems to some to be marginal or overambitious is going to become common sense pretty quickly," Yang predicted, just weeks after ending his own presidential campaign.

But the U.S. proposal is only one temporary measure in a vast pandemic relief program that's also laden with the usual lard for millionaires and billionaires — including particularly generous handouts for wealthy real estate investors with backgrounds remarkably similar to those of the president himself and his son-in-law, Jared Kushner.

The Canada emergency response benefit (CERB) that has become Ottawa's main non-EI support for people hurt by the pandemic resembles a UBI in some respects. It's designed to catch people who work in the "gig economy," so it covers many who would be missed by conventional EI.

CERB is not really universal, however, and it's set to run for only four months. The hope is that, by the time the program ends, the country will have returned to business as usual, more or less.

A 'business-friendly' approach to income supports

But Canada has its own advocates for a permanent UBI.

When the incoming Doug Ford government decided to cancel a UBI pilot project in Ontario in late 2018, Marinescu helped to organize a group of 120 CEOs, presidents and owners of Canadian companies to ask him to reconsider.

"We see a guaranteed basic income as a business-friendly approach to address the increasing financial precarity of our citizens and revitalize the economy," they wrote in a letter to the premier. Their effort was not successful and the pilot program was killed.

The pandemic, however, has given the idea wings. It has the support of one party on Parliament Hill:

Conservative Sen. Hugh Segal is a long-time proponent of UBI. He even wrote a book about it: Boot Straps Need Boots: One Tory's Lonely Fight to End Poverty in Canada.

Queen's University economist Robin Boadway said that nearly all existing benefits and tax credits in Canada are means-tested. "These are things that go out on the basis of what your reported income has been in the last year," he said.

A switch to UBI, he said, would require a fundamental shift in approach.

"I think there are good chances that people will see the value of universality when it comes to transfers, but the transition from an existing emergency program to a permanent program that's funded is one that would take a bit of time, I think," he said.

An incentive to work

The Trudeau government has insisted on means-testing rather than true universality in its pandemic relief programs and has made a series of tweaks to them, progressively loosening the entry criteria. But the Alberta Liberal Party has embraced UBI and has called on its federal counterpart to immediately begin payments of $1,500 per month to every Canadian adult and $500 per month for every child.

UBI has its opponents, though. Many on the left object to the fact that UBI money goes to rich and poor alike, while those on the right frequently attack it as a handout for people who don't wish to work.

Marinescu argues that a UBI would provide more incentive to work than some of the Trudeau government's current pandemic benefits.

The CERB, he said, is "kind of like a scaled-up welfare with the same welfare traps. In some ways, it pays people not to work, or forces them to choose between going back to work or staying another month or two on the CERB.

"And that's precisely what basic income is meant to address — it's a work incentive because you get to keep the money when you go back to work."

Marinescu said the experience of past pilot projects has shown that labour force participation doesn't decline when a UBI is introduced — and that some people have been able to find better jobs with the help of a UBI "because they were able to get off the hamster wheel and retrain."

"No other government program that I've seen could touch the efficacy of a basic income to give people more options in life."

Overhauling the safety net

Marinescu said he hopes the current crisis will change the minds of many who dismissed UBI as a transfer of wealth from the hard-working to the lazy. "A lot of people who are now finding themselves on a basic income are realizing, 'I don't want to work any less. I want to go back to work'," he said

But Pedro Antunes, chief economist at the Conference Board of Canada, said he thinks "we'll have to wait and see whether this really changes the social safety net we have in place.

"If we were to go that route, I think we'd really have to revamp the way we deliver the social safety net federally and provincially. And I'm not sure we're ready to move on that just yet."

Antunes said that, prior to the pandemic, some of the labour trends that drove the UBI movement — the rise in precarious "gig" jobs, for example — were easing or even reversing themselves.

"We're coming out of a situation over the last couple of years where Canada's economy and labour markets were in pretty good shape and favouring the workers. In 2019, employment growth was strong, labour markets were very tight and wage growth well above inflation," he said.

Attitudes may shift

Just as the First War produced the income tax, the Second World War left Canada with the basic structure of its modern health care system.

There were those who wanted to see it dismantled with the return of peace, the Canadian Public Health Journal warned in an editorial at the time, saying demands had "already gone out for curtailment of public expenditures and redirection of effort." The CPHJ wasn't having it.

"Gains must be consolidated. The last war left its lessons. There can be no reduction in public expenditures, and no lessening of public effort, for the safeguarding of health," the journal wrote.

The nature of the post-COVID recovery is likely to affect the debate over UBI. 

A strong rebound would lessen the pressure to strengthen the safety net. But it might prove politically difficult to push large numbers of people off the basic income scheme if the economy remains weak after the epidemic recedes.

"Once this crisis is over," said Antunes, "I think it's inevitable we're going to return to that trend where labour markets are generally tight because of the exodus of the baby boom cohort, so I don't know that we'll have to have these measures in place forever."

But millions of working people who are used to seeing themselves as independent are now experiencing hardship and turning to governments for help. Will that change how they view others in need in the future?

"Public attitudes may well change as a consequence of this pandemic and there may be more social acceptance," said Boadway. "It's possible the thing will catch on, and people will realize that if a universal basic income had existed before the pandemic hit, we wouldn't have been faced with as dire a situation as is being faced by so many people without money."