The basic income guarantee (BIG)—sometimes called a basic minimum income, or negative income tax—is hardly a new idea, but it is currently in vogue. National governments in Switzerland and Finland, and the provincial administration in Quebec, are all considering proposals for a minimum income. Most recently, Canada’s federal government invited one of the country’s foremost experts on the subject to discuss it at a pre-budget hearing in Ottawa.
The BIG is one of those rare policy tools that has garnered support from thinkers, activists, and policymakers all across the ideological spectrum—from the late American neoliberal economist Milton Friedman, to Canadian former Conservative senator Hugh Segal, to the centre-right coalition in Finland, to typically centre-left Green parties, feminists, self-identified progressives, even socialists.
Naturally, many people worry about the potential work disincentive, but past studies—including the Mincome experiment in Dauphin, Manitoba in the 1970s—suggest that this disincentive is not as powerful as one might expect, and may be partially offset by human capital gains. (For example, employees might take time to upgrade their skills rather than work menial jobs to make ends meet; new parents might stay home to look after their young children rather than rush off to work.) If designed effectively, a BIG could have beneficial effects on the labour market, the private sector, the overall education level of society, and public health.
It could afford numerous benefits to businesses and aspiring entrepreneurs in particular.
• Education, skills, and innovation: By providing time for recipients to upgrade their education and cultivate new skills, a BIG could promote both a more dextrous workforce and a better educated society. Visionary individuals would also enjoy more freedom to experiment and hours to invest in long-term projects.
Think of tech pioneers who have spent countless hours tinkering in their garages, refining the latest game-changing breakthrough. A BIG could encourage time-intensive innovation and research, and offer many more creative geniuses the opportunity to engage in it.
• New commercial opportunities: Pro-business advocates of a BIG tend to emphasize its potential to reduce social program and public health costs, while streamlining administration and bureaucracy. In turn, this could allow the private sector to offer services for which the state had previously assumed responsibility. Many existing businesses could look forward to growth in their customer base, since more people would have disposable income.
• Easing of downturns: When economic recessions occur, poverty typically rises, and consumers at all income levels tend to cut back on their spending. Businesses watch their revenues drop due to a lack of customers. Managers respond by laying off employees, which exacerbates the problems of poverty and too few customers. A BIG could help to stabilize the situation by dulling the sharp edges of the business cycle, and mitigating various other social ills associated with hard times.
Of course, many practical questions and details warrant policymakers’ attention. How should we finance a BIG? For the purpose of determining who qualifies, how should we define the poverty line? Would it be appropriate to distribute the BIG differently based on cost of living, or could impecunious residents of inner-city Toronto, downtown Vancouver, Dawson City, Iqaluit, Halifax, and rural Quebec all expect an equal supplement? At what age should individuals become eligible? What about new immigrants and asylum seekers? What about people with serious physical disabilities versus those with able bodies—should they receive different income supplements?
Nonetheless, encouraging results from past trials indicate that the BIG is worthy of the serious consideration some governments are giving it.