Terminating a Basic Income experiment tells us something, too

The decision to terminate the Basic Income Experiment in Ontario is a sort of finding, too.  The design of related experiments has usually been based on short term economic or behavioural effects – because that, after all, is all one can hope to pick up from an experiment for two or three years.  However, the arguments around Basic Income, on both sides, are about something different – about social and cultural change.   That kind of change can take a generation or more, and it’s simply not going to appear in the way that economists usually model such effects.  I’ve previously drawn the parallel with the introduction of old age pensions, where the effects in the UK weren’t fully resolved in sixty years.  It’s not possible, more than a hundred years after the introduction of pensions, to be certain what the implications were for older people at the time – and people considering retirement would have been right to be uncertain.  The costs of the 1908 scheme led the UK government to threaten retrenchment, and after massive post-war cuts in other services (the “Geddes axe”, applied 1921-22, cut spending worth 10% of GDP), in 1925 pensions were fundamentally reformed to raise money through contributions instead.   Most older people were retiring by the 1940s, but many people who were retiring in the 1970s were still deferring their pension claims.

The decision in Ontario comes shortly after a (somewhat less brutal) decision in Finland not to extend their experiments.   The message coming over is clear and strong: Basic Income is pushing at the limits of what politicians are prepared to consider.

What does this imply for Basic Income?  First,  politicians won’t leave Basic Income alone – they just can’t stop themselves from tampering.  Look at Child Benefit, which was working really well before the Coalition government decided to create special conditions for wealthy people. If Basic Income comes, it won’t be forever.

Second, there’s no such thing as an unconditional benefit.   Issues which may seem relatively minor now, such as the treatment of migrants, prisoners or religious communities, are going to surface eventually.   Some of the conditions are more liberal, some are less intrusive, but there will be conditions – tax exemptions to “send a message”, rewards for virtue, or whatever.  People advocating for Basic Income have to argue for conditions to be kept to a practical minimum.  That’s hard to do when politicians and the press will convert it into “benefits for paedophiles” or “benefits for members of ISIS”, with specific instances.  Be prepared.

And that leads to the third point: whatever people use their Basic Income for, they’d be unwise to bank their long-term security or future life-plan on it.  How long would it take before the system is so strongly embedded that the future becomes certain?   I can’t be sure, but it’s not going to happen in a three year experiment.

One comment

  1. Malcolm Torry

    Dear Paul
    Thank you – useful comment: particularly the point about not being able to evaluate significant social policy change in the short term,
    A clarification: The Ontario experiment never was a Basic Income pilot project. The payments being tested were household-based and means-tested. The difference from UK means-tested benefits was that the Ontario payments were not work-tested. It’s a pity that they called the Ontario experiment a Basic Income pilot project, because it wasn’t a Basic Income. A Basic Income is an unconditional income paid to each individual, and anything that isn’t that isn’t a Basic Income. It’s also a pity that they stopped the experiment early, because we were hoping to learn something about employment market effects of non-work-tested benefits. We hope that a certain amount of learning from the experiment will still be possible.
    Unfortunately you might be right that if ever a UK or other government established a genuine unconditional Basic Income then ministers wouldn’t be able to resist conditionalizing it. However, there are instances where that hasn’t occurred. The Alaska Permanent Fund dividend remains unconditional, as does the NHS. Child Benefit remains unconditional, alongside the tax on children now suffered by higher rate taxpayers living in households in receipt of Child Benefit, and the unfortunate consequence of Child Benefit claims being withdrawn in such households. This suggests that the future of a genuine Basic Income could go either way. It could either suffer from the imposition of conditions, or we could find it firmly embedded as a popular and secure financial platform on which individuals and households could build.
    Only time will tell.
    Best wishes
    Malcolm
    Dr. Malcolm Torry, Director, Citizen’s Basic Income Trust, and Visiting Senior Fellow, London School of Economics (writing in a personal capacity)

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