Article Throwback: Guaranteed Minimum Incomes
On November 15th a proposal for guaranteed incomes was released on PEI that has created quite a discussion. This is nothing new, socialists have been attempting to use PEI as a test subject for their social experiments for many years now. I am pleasantly surprised though that this time the socialists are receiving quite a bit more push back than in the past. Still, all political parties are pushing this idea and so it requires us to provide strong arguments against guaranteed incomes and not let our guard down. The following article is from 2015 just before a provincial election where Rob Lantz, the current Minister for Housing, was the Progressive Party’s leader.
It provides some basic arguments as to why guaranteed incomes can’t work, will lead to more poverty, and are fundamentally immoral.
Worst of the Worst: Guaranteed Minimum Income
It’s election time and as is the custom leaders from all the political parties in PEI are attempting to woo voters by pitching them all sorts of ideas about how they can solve this problem and that problem. PEI is a fascinating case in that it receives an incredible amount of federal transfers in the form of equalization payments and direct spending by the federal government. This has led to a general consensus by Islanders that government should be involved in many aspects of their lives and should also provide them with numerous services and economic benefits.
With Rob Lantz’s recent support for a pilot project on basic income guarantee we now have all four major parties in PEI pushing this idea. I have written about this topic several times and it astounds me how people can take it seriously. Before we get in the details of the idea, we should remember the proverb “If it sounds too good to be true, then it probably is.” When it comes to the idea of a guaranteed income the proverb seems rather apt. It just sounds too utopian to even bother addressing but oddly enough since all major parties are now pushing the idea it seems we will have to waste a considerable amount of time debating this idea and then watch it fail.
The idea, taken from this pdf (here) is simple. Add a new welfare program on top of the existing ones in order to top off people’s income that do not meet the minimum threshold. This is meant to make it simpler for people to access welfare so they may live with “dignity.” This idea has been around for a while and Milton Friedman, an economist admired even by some libertarians, actually supported it. Some conservatives have been known to support it also but only if all other welfare programs are removed so that the size of the civil service and bureaucracy can be decreased. In PEI however to talk of cuts to the civil service is considered blasphemy, and so a guaranteed income is proposed as an addition to current welfare programs not a replacement. The interesting thing to note is that the proponents are deliberately trying to change the language around the program, and so they do not call it welfare, charity or other names used in our vernacular. Rather they call guaranteed income a “right” or a principle of “fundamental justice.” Confucius said that the first step to truth is to call things by their real name. The debate around this subject would be better served if interlocutors heeded this advice. Their attempt is to remove the stigma and the regulatory hurdles welfare recipients face. What they do not take into account is that the hurdles and stigma act as a deterrent for people who might try to game the system and ensures that those who truly cannot work access the benefits. If these obstacles are removed the floodgates to welfare will truly be burst open and Island society will crumble. Let me explain why.
Let’s assume that our do-gooder politicians out of their infinite wisdom decide that for an adult to live with dignity that they require an annual income of 30,000. Since people respond to incentives and we are rational people lets work out the sequence of events. For one anyone that works for less than 30,000 will have a strong incentive to quit his job. After all the majority of people work for a paycheque and so if they work for less than 30,000 why would they continue to work if there are guaranteed a 30,000 annual benefit? The answer is they won’t but will collect the benefit which they have been told is their right. The consequence of this is that there will be less production in the economy which means less income to redistribute. The only way to keep the system viable then is to raise taxes on the producers so that the government can redistribute more income to the new welfare recipients. This has an additional consequence though, the net income of those earning above 30,000 will be diminished. So there will be more people closer to that threshold of 30,000 that work year round. When the costs of full time employment are factored in like taxes, gas, clothes and food they might very well decide that they are better off collecting the guaranteed income instead. Even if they calculate they make slightly more working, they might find it preferable to not work and enjoy more leisure. This will cause further tax hikes to make up the shortfall and so the cycle repeats until nobody decides to work and the system implodes.
This is the economic argument against a guaranteed income, but there is also a moral one.
At the start of the pdf I cited above, the working group for a guaranteed income cites a quote from Nelson Mandela:
“Like slavery and apartheid, poverty is not natural. It is man-made and it can be overcome and eradicated by the actions of human beings. And overcoming poverty is not a gesture of charity. It is an act of justice. It is the protection of a fundamental human right, the right to dignity and a decent life.”
I guess the idea is to equate their attempt to make PEI a new experiment for socialism to the same struggles as those for abolition, women’s suffrage and others. This comparison is egregious. Real rights are things like freedom of speech, life, property rights, habeas corpus, a speedy trial, privacy and others. To call a guaranteed income a right is to try to dignify an outrageous idea by associating it with actual real human rights that people have had to fight for.
To implement a guaranteed income is to go backwards and actually implement a form of slavery. The government cannot create resources and goods from nothing, it must take them from others. The proponents of this idea acknowledge this on the 8th slide of their PDF by calling for more “redistribution.” This is just an euphemism for theft. The only way to guarantee an individual an income is to force somebody to produce goods or services and then forcibly take from them the fruits of their labor and give them to the welfare recipient. I do not think it can be denied that this is a form of slavery.
However, the socialists are creative, they are not calling for higher taxes on the people of PEI, Mr. Redmond in particular wants cooperation from the Federal government to implement this policy. What this means is they want other parts of Canada to pay for this program so the people of PEI will not be pitted against each other. What they want to do it seems is make sure that Federal politicians take more money from other working Canadians outside of PEI and give it to non-working Islanders. It appears that him and the other political leaders are not happy with the other numerous welfare redistribution programs like employment insurance, equalization, Cananda Health transfers, ACOA and disproportionate federal spending. What they want is more “redistribution.”
The fact that these “leaders” cannot figure out a way to implement this program without asking for more federal money tells us all we need to know about this program. They are implicitly admitting the program is unsustainable as any reasonable man can figure out. This guaranteed income is a moronic idea which if attempted will bring about more bureaucracy, more taxes, and more poverty.
I am not joking in the slightest when I say if my aim was to destroy Prince Edward Island then guaranteed incomes would be exactly the tool I would choose.