Why did Ontario Kill Basic Income?

Ontario dramatically shut down its highly-publicized basic experiment on July 31.

The province had been paying 4,000 people around $17,000 CAD (around $13,073.68 USD) a year or $1,416.67 CAD (roughly $1,118.06 USD) a month. The idea was to test basic income in places like Thunder Bay and Hamilton.

The test was supposed to run for three years but Ontario’s new Minister of Children, Community, and Social Services suddenly shut it down. The province announced the cancellation of the experiment a month after Conservative Doug Ford became Ontario’s premier, Fast Company reported.

Hypocritically, Ford had promised to not cancel the test on the campaign trail. Once in office, Ford stayed silent and let McLeod do his dirty work.

That exposes the unpleasant truth; Basic Income supporters cannot trust any politician. When they get alone with social services bureaucrats behind closed doors most conservative politicians will change their minds.

How Social Services Bureaucrats Kill Basic Income

Disturbingly the test shut down without completion; it was supposed to last for another 15 months. Instead, Ford and McLeod needed no data to pull the plug.

A likely scenario is that they set the Basic Income test up to fail from the beginning. “They” were Social Services bureaucrats who hoped that a friendly Liberal government would simply cover up any positive results to protect their jobs and union votes.

When conservatives won that changed; because there was now a possibility that hard data would show Basic Income was cheaper and more effective than traditional. With that possibility, it became imperative to shut the experiment down ASAP.

Many social scientists undoubtedly know that most of the data collected during past experiments shows the effectiveness of the basic income. For example, Dr. Evelyn Forget’s analysis found that rates of hospitalization for mental illness fell by 8.5% during a basic income test in Dauphin, Manitoba, in the 1970s. See Lost Connections by Johann Hari for full details.

Disturbingly the shutdown comes just as news outlets were collecting anecdotal evidence that basic income was helping the poor. Interestingly enough, several such articles appeared in The Hamilton Spectator.

For example, a man named Steve Pelland who had been living in a shelter was planning to go back to school to learn a trade and get his driver’s license with a basic income. Now, Pelland, may have to live in a homeless shelter and give up on college, The Spectator reported.

Frighteningly, social services bureaucrats would rather throw people on the street than have evidence the poor can help themselves in the media. The heartlessness and selfishness on display is frightening here.

What Basic Income Supporters can learn from Ontario

There are a few important lessons that basic income supporters can learn from the setback in Ontario.

The most obvious and important lesson is that the traditional welfare or social-services system will never implement a basic income. The social services infrastructure exists to provide jobs for middle-class bureaucrats with college degrees, not to combat poverty.

To succeed, it must deliver a basic income outside the traditional social services and welfare infrastructure. The two most successful basic income schemes in the world; America’s Social Security system and Alaska’s Permanent Fund Dividend, operate entirely outside of traditional social services.

Both systems pay recipients directly if they meet certain criteria. Most participants join by submitting a simple form and get the money deposited directly to their bank accounts.

How to Set Up a Basic Income Scheme

Tellingly, a great deal of subterfuge was used to set those programs up. The creators of both Social Security and the Permanent Fund lied to sell the plans to the people.

Social Security; which provides a basic income to 61 million people, was set up before the modern welfare state. When Social Security was created in the 1930s, there were few social services bureaucrats and no government employees unions to block it. Moreover, Social Security’s creators; President Franklin D. Roosevelt (D-New York) and Secretary of Labor Frances Perkins, cleverly disguised it as a pension plan for the elderly.

This means a Basic Income may have to be sold to the public as something else. For example; America’s variation on Milton Friedman’s Negative Income Tax, is deceptively called the Earned Income Tax Credit.

Revealingly, the Alaska Permanent Fund payment is euphemistically called a dividend. The money it distributes comes from a tax on oil and mineral royalties revenues.

Why Basic Income Must Benefit the Middle Class

Incredibly, Alaska’s Republican Governor Bill Walker is an outspoken advocate of the Dividend. Walker even puts out press releases boasting how the dividend raises the average income in the state, Vox reported.

Walker loves the Dividend because it benefits the middle class, the majority of the voters. Note: this is a great way to sell basic income to politicians, remind them of all the votes they can buy with it.

Therefore, a successful basic income must reach the middle class. Politicians will dismiss programs that benefit only the poor as welfare.

Entitlements that reach the middle class have strong support across the political spectrum. In America, even President Donald J. Trump (R-New York); hardly a friend of the poor, is a staunch defender of Social Security.

“As Republicans, if you think you are going to change very substantially for the worse Medicare, Medicaid and Social Security in any substantial way, and at the same time you think you are going to win elections, it just really is not going to happen,” Donald J. Trump in March 2013. (Quoted in USA Today, 9 July 2018)

What a Successful Basic Program will look like

The experiences with the Social Security, the Alaska Permanent Fund, and Ontario indicate a few rules a successful basic income scheme must follow.

Those rules are:

1. The social services bureaucracy will never tolerate basic income. The bureaucrats will throttle any experiment.

2. Basic income experiments conducted through social services infrastructures will fail. Therefore, we should always refuse offers of bureaucrats to “test basic income.”

3. The basic income must be administered outside the traditional social services bureaucracy. Consequently, Chicago Alderman Ameya Pawar’s (D) plan to redistribute the Earn Income Tax Credit as basic income might work.

4. A successful basic income must include the middle class. Basic income will only survive if most voters enjoy it.

5. Basic income plans that benefit only benefit the poor will fail because they have no political support.

6. No politician or bureaucrat is trustworthy.

7. To succeed Basic Income supporters will have to build a broad political coalition.

8. That coalition will have to deliver enough votes to remove any politician who opposes basic income from office.

9. Limited programs that benefit many people will be more likely to succeed than efforts to give a minority a lot of money.

10. Forget testing. Concentrate on building the coalition, promoting the basic income, and implementing universal basic income instead.

Following these guidelines might make Basic Income a reality. Trusting social services bureaucrats and politicians will only lead to more heartache.

This commentary first appeared at Market Mad House a tireless advocate for Basic Income.

Daniel G. Jennings is a writer who lives and works in Colorado. He is a lifelong history buff who is fascinated by stocks, politics, and cryptocurrency.

Daniel G. Jennings is a writer who lives and works in Colorado. He is a lifelong history buff who is fascinated by stocks, politics, and cryptocurrency.