canada big cash transfers bolsa

Cash In the Pocket, Without Conditions
namibia malawi low income welfare wall

Canada's Major Daily Paper on BIG

You can't pull yourself up by your bootstraps if you have no boots. What if Canada trusted its poor to do what's right for them without an aid worker peering over their shoulders? To make such humanity feasible, Canada would have to tap its commonwealth, which is largely all the money that Canadians spend on the land and resources that Canadians use, the policy of geonomics. This 2010 article is from The Globe and Mail, Canada’s most important daily newspaper, on Nov. 19.

by Erin Anderssen

Canada’s House of Commons committee on poverty released a report proposing a guaranteed Basic Income Grant (BIG) for Canadians with disabilities, on the model already available to seniors. The Senate released a similar report this spring calling for a study of how it would work for all low-income Canadians.

In Quebec, a government task force went further, recommending a minimum guaranteed income starting at $12,000 for everyone in the province.

The idea of giving money to the poor without strings melds altruism and libertarianism, saying both that the best way to fight poverty is to put cash in poor people's pockets and that people can make their own choices better than bureaucrats can.

It's runs counter to the approach that controls “our” money and tries to strong-arm the poor into better lives. But under the current system, the wage gap continues to grow, and one in 10 Canadians still struggles below the low-income line.

Economists continue to bounce the idea around. Two years ago, Canadian researchers started their own chapter of the Basic Income Earth Network (a group founded in Belgium in 1986) to co-ordinate an ongoing discussion -- and eradicate poverty.

It has been tested with success in other countries. In the past decade, the number of poor households in the world receiving direct financial transfers has grown rapidly. European nations such as France and Austria, which spend slightly less than one-fifth of their gross domestic products on cash transfers to low-income citizens, have had far more success reducing poverty than Canada has.

But the shift has largely been led by developing nations. These programs -- now in at least 45 countries, helping 110 million families -- range from social pensions and education stipends in South Africa to Brazil's Bolsa Familia guaranteed grant to families. Some come with conditions, such as sending children to school or the doctor, but many do not. Studies have shown significant benefits, in particular that kids get healthier.

Joseph Hanlon, a development scholar and co-author of a recent book called Just Give Money to the Poor, says research has not proved conditions are needed. In general, people spend the money on food and their children, and invest a portion of what remains toward improving their incomes. In a region in Namibia with an unconditional basic income grant, child malnutrition dropped from 42 per cent to 10, and school dropouts dropped to almost zero.

In a controlled study conducted by the World Bank, researchers found that giving cash transfers to families in Malawi increased school attendance of girls and young women by the same amount whether or not a condition was attached.

In Britain, an experiment was recently conducted with a small group of people who had been living on the streets for more than five years. They were given a budget that they could spend however they wished. The results were not perfect. But most spent far less than the money available to them, mostly on clothing, food and rent. One person who chose to remain on the street asked for music lessons, and that was all right too.

The idea of a BIG has been tested before in Canada -- the only experiment of its kind in North America. In the mid-1970s in Dauphin Man., a farming town with then about 10,000 residents, every household was given an annual budget, subject to their income level. For a family of five, payments equaled $18,000 a year in today's dollars.

There was only a slight decline in work -- mostly among mothers, who chose to stay home with their children, and teenaged boys, who stayed in school longer. Dauphin also experienced a 10% drop in hospital admissions and fewer doctor visits, especially for mental-health issues.

In developing nations, a small amount of money can bring about big changes. In a country like Canada, the basic income needed to pull everyone out of poverty would have to be larger, balanced against higher taxes. The Quebec proposal could run the province as much as $2-billion, including the cost in lost taxes if minimum-wage workers did the math and left those jobs.

The current welfare system has costly and often overlapping bureaucracies engaged in such issues as whether someone merits assistance for a new bed because their low-rent basement apartment has flooded. And it erects the “welfare wall,” the point at which working a minimum-wage job is less beneficial and secure than collecting a cheque by staying home. Or the mom who goes back to school to improve her prospects and loses her welfare payments because she is not seeking jobs.

Conservative Senator Hugh Segal, one of the more vocal proponents of no-strings-attached aid for the poor, points out that the guaranteed-income program for seniors has greatly reduced poverty, especially among women. “It's dehumanizing,” Segal says. “Think of a mother having to negotiate through Plexiglas for enough money to feed her family.”

It also costs people their privacy. Candace Witkowskyj, a legal advocate for welfare recipients in British Columbia, tells stories of people forced to take pictures of the contents of their drawers to prove that they lived alone or to get a doctor's note to justify a $20 emergency food voucher.

Requiring the poor to prove continually that they are deserving of assistance or threatening to pull help away without notice only discourages the risk-taking and confidence required to get out of poverty. Giving money with no conditions removes the stigma and shame around poverty, allowing people to focus instead on how to improve their lot.

JJS: The main objections to an extra income apart from one’s labor go away when the money comes from our commonwealth, the worth of Earth. Nobody is slaving away to create either Earth or its economic value -- people must spend money for land and resources no matter to whom they pay it. Since society creates that value, the members of society may as well share it; it’s theirs. And if people work less and take music lessons, so what? Are we to serve the economy or is it to serve us?


Editor Jeffery J. Smith runs the Forum on Geonomics.

Also see:

n New Zealand, Australia, and Canada …

Researchers Find the Growth-Friendlyest Tax

Mongolians Demand Dissolving of Parliament

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