Four (more) arguments against real-world basic income

With the Ontario Liberals rolling out their basic income pilot project to much fanfare this week, it’s an opportune time to dive into the debates around BI once again.

1 Political aspects of unemployment

A few weeks ago I attended a debate on basic income and the left in Toronto hosted by The Leap. During the debate, the proponents of BI returned again and again to those who are outside the labour force. This focus is important. Welfare in Ontario and elsewhere is equivalent to poverty. And those outside the labour market are central to the current plans for basic income, which are more replacements for welfare rather than the kind of universal schemes argued for by some on the left. What BI fans forget is that even those outside the labor force have important functions under capitalism. While there was much said about people who can’t for various reasons participate in the labour market, there was scant attention to their position within our economic system.

A number, primarily women, are “outside the labour force” but performing the invisible, difficult, unpaid labour that makes the system tick: childcare, housework, non-market food production. Their work is valuable for society but needs to remain unpaid as long as it isn’t done for profit. The other part of those of working age but outside the labour force are key in a different way. They are a reminder that those of us don’t have any wealth have to work for a wage to survive…or else. John Clarke, who has been consistently critical of neoliberal BI schemes, made the point early in the debate that unemployment, poverty and homelessness have a political function in capitalism: they are part of the apparatus of economic coercion. People become examples for others: “Don’t want to end up on the streets/in dire poverty/…? Better get to work.”

Just another reason everyone should read the brilliant Polish economist Michal Kalecki’s 1943 article, “The Political Aspects of Full Employment“, which is really about the political function of unemployment. It is the clearest statement I’ve seen of how capitalism needs the unemployed and the poor, and how far-reaching any serious challenge to eliminating both is. It’s not going to be a policy band-aid but the fight of our lives. I didn’t see much engagement on the part of the pro-BI panelists at the debate (or in most of what I read defending BI) with how BI would handle, organizationally, strategically and politically, the fact that a ‘progressive’ version would be such a fundamental challenge to the basic workings of capitalism.

2 What goes out, must come in

It’s bizarre to see a political position advanced with so little attention to what it would cost capital and how we would go about extracting that cost. At the debate, so many of the arguments from the pro-BI side and comments from the audience simply channeled Oprah: “and you get a BI, and you get a BI, and you get a BI,…” I hate to be the egghead economist, but it was basically all a discussion of expenditures with no attention to revenues.

However, unless we are talking about a very targeted, means-tested BI program, then we’re talking about a huge fight over economic resources. And if we are talking about that kind of program then that’s what the Ontario Liberals are already proposing and we don’t need fancy “basic income” branding or a pilot project that eats up three years while welfare recipients continue in poverty. We already know that giving people more money makes them less poor. Just raise the goddamn rates and stop the morality policing!

In the case of a more ambitious BI, my very rough calculations for Ontario are that even a very modest $15,000 universal, unconditional basic income for everyone would require a doubling of provincial tax revenue, even taking into account savings from less spending on policing, healthcare and so on. When is the last time we were able to extract an additional percentage point of tax revenue, nevermind a doubling? My point is not to get lost in the minutia of dollars and cents or demoralize people, but to make clear the enormity of the task and ask serious questions about strategy and organization—those to get us to a position of power to extract anything meaningful. This is especially the case in a situation where the right is advancing BI as a means to subsidize employers—with workers too weak to win wage increases subsidizing themselves with their own taxes—or to take away some of the hard-won public services that we currently get in kind.

Even if we think about BI as a redistributive mechanism, which we shouldn’t as it ignores the fundamental workings of capitalism, it is hard to see current plans as little more than getting the working class to subsidize itself rather than effect meaningful redistribution.

3 Withholding labour without organizing workers

Proponents of BI at the debate also pointed out numerous times that BI allows workers to opt out of the labour market, to withhold their labor. They argue that this is the weapon that workers have always wielded in the face of the boss to extract gains. First, there’s the detail that existing BI proposals like the one in Ontario look to set the BI amount below the poverty line, making real, long-term opt-out from work much harder. But, more importantly, those arguing for BI on the left miss the fact that workers have won when they have withheld their labour collectively, when they have organized together.

Without collective organizing and with an insufficient BI, you are just someone with your labor power to sell and a few extra hundred dollars a month. The proposals for BI floating around now, whether in Ontario, Finland or India, are all top-down and driven by the right. If anything they will make us more atomized and less organized. They are also means-tested, still asking the question of who are the “deserving poor”? As such, they are not building broad constituencies that could defend them.

Once again, the question I have for proponents is not whether BI is or isn’t nice in abstract as policy, but how do we create the concrete politics, organizations and power to attain it.

4 Fool me once…

Outside the left’s debate halls, a real world BI is gathering steam in Ontario and it’s not looking pretty. For now, the Liberals are embarking on a three-year pilot project for something that will be a replacement and consolidation of various welfare programs. Employers, including the Ontario Chamber of Commerce, are on board with it. Their vision is plainly for BI as a subsidy for low wage work; they have explicitly counterposed it to an increase in the minimum wage.

Liberal-aligned media has been predictably giving the idea a lot of free PR. The Toronto Star has put out story after story in support of BI and the Liberal proposal in particular; though, to be fair, the paper also published a surprisingly sceptical editorial, rightly calling for immediate action on welfare rates, the minimum wage and labour standards (just what the Fight for $15 and Fairness has been patiently building a grassroots, bottom-up campaign towards for years). Just today the Toronto Star ran a story headlined, “Province offers up $17,000 no-strings annual basic income”.

There are too many issues with the story that merit their own article, but just the headline has two glaring problems. First, the basic income amount in the pilot study will be a maximum of $17,000, which is still 25% below the poverty line, with most people in the pilot getting less. The pilot will only affect 4,000 households (compared to over 500,000 cases currently for Ontario Works and ODSP combined) and allow the government to leave already criminally-low welfare rates stagnant for another three years. Second, this is not a no-strings program. Any wages made in excess of the basic income amount will be clawed back at a 50% rate (hence workers subsidizing themselves). There is no pretension to universality on the part of the Liberals with their policy; this is a rationalization of welfare.

People are rightly fed up with poverty, low wages and growing inequality. The Ontario Liberals, like increasing numbers of politicians across the world, are adroitly exploiting these fears to push policy proposals that sound like a lot and do very little.

Let’s not be fooled again. The Ontario Liberals have used our own slogans against us in the past many times. See, for instance, how they commandeered “free tuition” in their last budget. What ended up to be little more than a rationalization of grants into one program was trumpeted as a progressive breakthrough. There are similar, very serious flaws with the basic income proposals being drafted and implemented by the Ontario Liberals and other right-wingers across the world. We need to be vigilant, have a clear idea of the enormity of the task ahead, and get organized rather than waiting for top-down policy to do the work of bottom-up politics.

9 thoughts on “Four (more) arguments against real-world basic income

  1. They need to drop this whole BI pilot and just raise ODSP and OW now !!!! I cannot suffer in poverty for another 3 years ehile they play games !!!! I believe that this BI Pilot is a plot to win votes. They don’t care about us in poverty ir they would help all of us NOW ! I am very suspicious of this whole thing ! Liberals snd NDP will never get my vote !

    1. As someone ON ODSP I fully endorse BI, with the increasing automation and other issues it’s absolutely essential, it’s why I’m backing Guy Caron for leader of the NDP, who BTW is in fact an experienced economist and former fiance critic for the NDP.

  2. Thanks for this article. A typo in the 3rd ‘argument’ – ‘They argue that this is the weapon that workers have always yielded in the face of the boss to extract gains.’ wielded not yielded.

  3. Hi Michal, I have a few questions.

    You say a basic income would be “a fundamental challenge to the basic workings of capitalism”. Why is this an issue for basic income but not for other aspects of the welfare state, like public health care and public education? You also complain that basic income “ignores the fundamental workings of capitalism”. How can basic income both fundamentally challenge *and* ignore the fundamental workings of capitalism?

    Finally, you say that basic income buys into the separation of the “deserving” from the “undeserving” poor. But I don’t see how this applies to the version being studied by the Ontario government. Only need, not desert is assessed. Persons with disabilities receive a larger payment because they tend to have greater need due to facing higher expenses and and barriers to employment, not because they are more deserving. Likewise, recipients have their basic income payments reduced as their employment income increases because they have less need, not because they are less deserving. So how do you see basic income supporting the invidious distinction between the deserving and undeserving poor?

    1. Should have replied to this sooner–sorry! Thanks for the comment.

      I don’t disagree that decommodification challenges capitalism as well, although on a sector by sector basis; I think this is one of the reasons why it has been a favoured tool of socialists and social democrats. I also said that proponents of basic income ignore the fundamental workings of capitalism and argue as if it doesn’t challenge these workings, at least that’s the case for most of what I’ve read and heard. For me this is a big gap and partly explains why the political project of BI has so far been limited to hope for a policy gift from technocrats rather than a movement for it from below.

      As to desert, I see your point but I stand by my characterization. My comment was directed at two things. First, because the pilot has maximum BI payments at 75% of the poverty line, people with incomes that fall in that gap between the poverty line and 25% below are still classified as undeserving under the program. Similarly, if you are receiving the pilot amount (especially one of the lower amounts below the $16k, which will only apply to a minority of pilot subjects from my understanding) and working, the clawback is a form of putting you into the undeserving camp as you can still be far below the poverty line and could face a marginal combined tax rate (including payroll deductions) of over 75% on earned income! Many left proponents talk about UBI, a universal and unconditional payment, but this Ontario pilot is very far from that (this is also the reason for the very high figures I come up with in my earlier piece, which is aimed at showing left proponents what this kind of program, not rationalized welfare, would cost).

  4. It’s more healthy for everyone in a society to be involved in and invested in the production of its goods and services. Let’s dust off the old “30 for 40” slogan and update it. Reduce the hours of work that define a “job” until everyone able to work can work. Define a “social wage” salary suitable to support families. Of course it has to be paid for out of the profits that labor generates but capitalists appropriate. Now thjere’s a program of aspiration for us!

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