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The Guaranteed Annual Income in Canada

By
B.A. Political Science

 

                Canadian Prime Minister Pierre E. Trudeau introduced in the early 1970s the concept that Canada must be a just and progressive society. Trudeau’s vision of Canada was a country of individual freedom and of social justice. Trudeau advocated that the nation turns into a fairer society. Thus, the prime minister thought that a fairer share of national wealth would give more freedom to everyone because Canadians could benefit from more opportunities if their basic needs were met. As a result, the Pierre E. Trudeau Government and the Edward Schreyer Manitoba Government jointly created an experimental program which provided guaranteed annual income to more than 2,000 families in Manitoba. The purpose of this project was to assess the social impacts of a guaranteed and unconditional annual income. Besides, social researchers wanted to know whether or not recipients would work less if they were given unconditional government cheques. Nowadays, the Ontario Government of Kathleen Wynne has started a similar social experiment in three different communities. As a result, the Province of Ontario has randomly selected 4,000 people to participate in the basic income plan. This type of social welfare system might revolutionize the way government delivers social programs in Canada. Some experts think that basic income programs might eliminate poverty and these initiatives might cost less than current social programs.

                To begin with, the Manitoban guaranteed annual income project was named Mincome and this plan was funded at 75% by the Federal Government and the allowances were paid by the Province of Manitoba. The official name of Mincome was the Negative Income Tax and aimed at abolishing poverty. There were several places throughout the province in which this social experiment was conducted, but the only place that every resident was eligible to receive these new government allowances was Dauphin, MB. Every resident of Dauphin could receive these unconditional cheques; however, the cheques were cut by 50% of work income in some cases. For instance, a recipient could earn up to $5,480 in the 1974 social program ($28, 278 in 2017 Canadian dollars) and these earnings would decreased the Mincome cheque. The main goal of Mincome was to "evaluate the economic and social consequences of an alternative social welfare system based on the concept of a negative income tax." Social researchers wanted to know how people would spend guaranteed annual incomes. Would they work more, invest in education, or simply waste all of this cash on alcohol or even on drugs? Even though, there has never been any official published report, researchers found out that guaranteed income recipients were healthier than the average population of the province. Moreover, several of them went back to school or entered the labour force after starting receiving Mincome benefits.

                As a result, the Mincome experiment was a real success because the project fully abolished poverty in the town of Dauphin. This project took place between 1974 and 1979 in the province of Manitoba where residents of different locations were chosen to play a part in a study on poverty. The Manitoba Government randomly selected some Winnipeggers to participate in Mincome. However, every resident of the small town of Dauphin could participate in this social study. The Province gave Dauphin residents unconditional cheques for five years. For that reason, Dauphin citizens could enjoy better living standards and poverty disappeared.

Furthermore, Professor Evelyn Forget from the University of Manitoba found out that hospitalization rate decreased by 8.5% which shows that people enrolled in the basic income project started to be healthier. In 2017, Gregory Mason reveals in the Winnipeg Free Press that authors of this experiment expected that guaranteed income cheques would be refunded through the reduced health cost triggered by the positive effects of these stable incomes for the recipients. There were less accidents and injuries than before the implementation of program. Works made by Derek Hum and Wayne Simpson from the University of Manitoba reveals that women tended to focus more on family responsibilities at the expense of paid work. The research shows Mincome did not decrease the number of working hours of male workers. Therefore, the system of basic income can greatly help the community and there are many scholars who think that this is the modern way of improving the lives of low income earners in the most efficient way. Bruce Ackerman, a famous U.S. constitutional scholar, says that ¨Basic income grants freedom and security without strings attached. It automatically supplements low wages without bureaucracy or complex wage subsidies.¨ Therefore, this new system of sharing national wealth is well adapted to liberal democracies because this program ensures that recipients can decide how they will spend the basic income.

Finally, the idea of equal sharing of national wealth has been advocated by many people. Nevertheless, this concept of wealth equality has been rarely implemented.  One of the reasons is that no one knows how to achieve wealth equality. Nevertheless, Canada tries to find a way to eliminate poverty through the experiment of guaranteed income in Ontario. However, this is not the first time in history that such an experiment is conducted and changes in governments have led to put aside the 1970s basic income experiment. The 1970s program failed because the program was cancelled by new elected governments. This is not easy to conduct social experiments there are political changes happening. In addition, the universal guaranteed income could have significant positive effects of the general wealth of people by simple reducing stress and helping people to maintain healthy living. Nevertheless, this new system might increase taxes and the long term effects on productivity are unknown. 

June 8, 2017

 



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This article is part of

Yannick B. Vallee
By Yannick B. Vallee

Yannick B. Vallee is a political scientist who recently graduated from Bishop’s University (Quebec, Canada) in the BA program of political science. He also has a college degree of Business Administration with a specialization in marketing. Nowadays,  he specializes in American, Canadian... (Read next)

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