OTTAWA, ON (September 27, 2018): Fears surrounding economic, social, and political disruption loom large in the minds of policy-makers throughout the West. In response, many governments – including governments in Canada – have renewed their focus on income redistribution, hoping that tackling income disparities will help restore political tranquility.
One such policy has been the previous Ontario government’s now cancelled “Ontario Basic Income Pilot,” aimed at guaranteeing individuals a guaranteed level of income, regardless of employment or other circumstances. However, while well-intentioned, do these sorts of programs do more harm than good?
MLI Managing Director Brian Lee Crowley and Munk Senior Fellow Sean Speer set out to answer this question in a new report titled A Work and Opportunity Agenda for Canada.
Examining the impact of substituting paid work with unconditional cash payments, Crowley and Speer find that not only is such a policy of higher taxes and higher government spending economically harmful, it also misunderstands and poorly serves the people it’s ostensibly aiming to help.
“Most people are principally concerned about work and opportunity. They do not want unconditional payments from government,” the authors write. “They want to feel like they are contributing.”
Specifically, Crowley and Speer identify seven key problems with a basic income model:
- It is likely unaffordable;
- There is a low probability of intergovernmental cooperation or bureaucratic efficiencies;
- It creates disincentives to work;
- It neglects the non-financial benefits of work;
- The presumption of mass joblessness is false;
- Poverty is not merely an “income problem”;
- Paying able-bodied people not to work defies society’s moral expectations.
This report finds that a high-tax, high-transfer agenda is bound to do more harm than good for Canada. Instead of focusing solely on equality, the most effective way to both materially and socially help those struggling with poverty is by pursuing a policy more focused on economic growth and opportunity.
“A higher rate of compound growth is the best means of extending opportunity to as many people as possible. The best means for achieving this goal is to liberate the market economy from the dead hand of government,” write Crowley and Speer.
To learn more, read the report here.
Instead Crowley and Speer set out an alternative agenda focused on expanding work and opportunity for all Canadians. A work and opportunity agenda starts first and foremost by learning the lessons from Canada's "redemptive decade" in the 1990s when the federal and provincial governments enacted sweeping economic and fiscal reforms to reduce the size and scope of government and enable businesses, investors, and workers to save, invest, and generate new economic activity.
The "redemptive decade" should be understood as a time when policy-makers understood the need to shift the focus from high taxation and redistribution (including public employment) to fiscal discipline, de-regulation, investment, and growth. It was a formula that gave Canada world-leading economic growth, investment, and job creation as well as significant reductions in poverty. Present-day policy-makers would be wise to relearn these lessons.
In addition, Crowley and Speer match their seven critiques of a guaranteed annual income with seven more targeted yet positive policy recommendations to bolster a work and opportunity agenda for Canada:
- Improve Indigenous education and social services;
- Support resource development;
- Strengthen Canada’s intellectual property regime;
- Support affordable and responsible home ownership;
- Favour pro-work labour policies;
- Open up internal trade;
- Eliminate intergovernmental overlap and duplication.
For more on the redemptive decade, watch Brian Lee Crowley’s video below:
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