Painful Truth: The cash giveaway experiment

Way back in a magical time called the 1970s, governments were more adventurous. They were even willing to try out radical ideas like lifting an entire town out of poverty.

In 1974, in Dauphin, Manitoba, the province and feds teamed up for an experiment called Mincome. Mincome was a kind of reverse income tax, which is closely related to a bunch of similar social welfare ideas like a guaranteed annual income or a basic income.

In short, if you lived in Dauphin in 1974, and you already had a job, little to nothing changed. If you didn’t, or your income fell below a certain threshold, the government would simply send you a monthly payment. If you found work, they reduced the top up by 50 cents for every dollar you earned until you were above the poverty line.

After four years, governments killed the project and mothballed the results, which weren’t studied until a few years ago. A university researcher found that hospitalizations decreased, and the high school graduation rate rose. Few people chose to stop working, but those who did were mostly women with young children at home, and students.

Now the ideas that inspired the Mincome experiment in Manitoba are coming back around again.

Utrecht, in the Netherlands, is going to try a similar program with its citizens, giving some a flat monthly basic income, no strings attached. They can spend it however they like.

This is not as weird an idea as it seems. If it was widely adopted, a basic income system would probably work like this:

• The government sends you a cheque, every month, based on the size of your family.

• Your employer (probably) cuts your pay back accordingly. So you’re getting the same amount of money, but less from your boss.

There are some obvious advantages to a system like this. First, it cuts into poverty a lot better than the miserable amounts given as welfare, especially in a high-cost-of-living region like Metro Vancouver. 

It’s great for students, parents (who can stay home longer with their children) the elderly, and people whose physical or mental disabilities make working difficult. 

It also sweeps away a lot of bureaucratic complexity. The basic income would replace welfare, EI, Old Age Security, and a host of smaller, piecemeal programs.

Finally, it would give workers more power to leave degrading or dangerous jobs.

There are also, obviously, potential problems with the system. The first is cost – we don’t know if the savings would come close to match the vast expense.

It would also be a huge problem for a lot of businesses that rely on minimum- or low-wage workers. How much would a fast food place be able to pay? And how many people would want it if they were getting a monthly cheque?

How much would a basic income be?

Right now, a single person on welfare in B.C. gets $7,320 a year, including housing allowance. The City of Vancouver’s liveable wage is $20.68 an hour, or $36,450 a year after income tax.

Split the difference – $18,200 a year for a basic income. That’s more than what Utrecht will give out, which is about 900 Euros a month, or about $1,270 Canadian.

It will be a small experiment, but it should be an interesting one. With a widening income gap and stagnant wages, new ways to ward off poverty will have to be bold to succeed.

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