Universal Basic Income — Why we can’t ignore it anymore.
Canada’s finest leader, Prime Minister Trudeau, has been giving daily updates about the financial situation of the country. I see at least one thumbnail with his face (and growing hair and beard) on YouTube daily, and I know he’s working extremely hard to keep Canada out of the worst situation. As a fellow Canadian, I am truly happy of Trudeau’s work. He’s working hard, and so are other Canadians trough these tough times.
But Canada is positioned for failure right now. Compared to other [developed] nations, Canada is in “deep” trouble. In a study last September, Canadians average household debt to income stood at 175.9%. This means for every dollar made by the average Canadian, they are in debt by a dollar and 75 cents. Over a million Canadians lost their jobs in the recent weeks, and over 2.1 million Canadians have seen their hours (or salary) cut significantly.
In my post last month on Canada’s situation, I described very well how tough Canada position was in this new economy. If anything, things have gotten worst.
Shopify became the third most valuable Canadian company in Canada today. What?
The solution in this economic distress is to get the printer to print more money from Bank of Canada, lower interest rates, and other drastic actions were taken. I won’t go in depth on those today, we’ll leave this for another day.
What I want to talk about is how over a million of Canadians will be receiving approximately $2,000 [money taxed] a month. Yes, those who lost their jobs will be backed by the government. So basically, if you lost your job due to the COVID-19 situation, or you saw your hours (& wage) reduce significantly, you can apply for the Canadian Emergency Response Benefit (CERB).
You go on the government’ website, you sign up — apparently it takes only a few clicks. Ask on Reddit on the PersonalFinanceCanada subbreddit, people have claimed the payments came through within few days of applying. Federal employees aren’t just watching Netflix and browsing through Instagram during work hours! Those people actually work!
But what was it really the best solution?
You see, coming from a background of engineering, there are always couple of solutions to all problems presented. There is never just one way to accomplish something. There are ways to optimize, and thus why some solutions become better than others.
No one is really auditing these applications right now. Technically, you could apply even though you are not eligible. You’ll receive the money few days later. But then, you are committing to fraud, and auditors will eventually catch you through a simple query on databases. Knowing federal employees’ skills, it will be a complex process in which the government will have to assign many employees to audit all these applications down the road. Optimization and efficiency are lacking for governments around the world, not just in Canada. Governments are slow, but can be bold.
This is a solution. Maybe it is a good one, we can’t come to this conclusion yet. But it is not the best solution — we know this for sure.
The solution I propose is to provide a Universal Basic Income (UBI) to everyone. Every adult in Canada will receive a lump sum of money. It doesn’t matter if you have lost your job or not. Without going all technical on you, an article on CBC News described how a form of UBI would cost about $43 billion annually ($30,000 [money taxed] annually to all adults in Canada) versus the $83 billion announced back in mid-March. However, the latter figure increased since then.
Give people money, and let them do whatever they want with it. Rent money, beer money, groceries, Yoga pants, latest iPhone, shop on Amazon or whatever. Give the people the power to decide. Perhaps this money can lower people’s debt? Of course giving “free money” to only those eligible appears to be less money spent than to give it to all adults in the country. However, after auditing costs and the infrastructure (and resources) that programs such as the CERB and EI utilize, money injected into the markets to bail out companies, that figure becomes significantly larger where UBI becomes more interesting. You know our Canadian dollar is worth less if this much money is printed, right?
The concept of UBI has always been around. Few communities in Ontario ran a UBI experiment few years ago. This is where Canada should have stepped up and provided relief to all Canadians. A quick Google search reveals that UBI does actually improve people’s lives.
Doesn’t really take scientists or high paid people to figure that one out. More money means less stress on essentials for families and couples. It also means more money circulating into the economy, and more taxed goods so the government can have more tax money to employ federal employees watching Netflix at work. I’m just kidding, of course.
Not really. But anyways, let’s make UBI a priority for our future generations. Alaska is already doing it, and I suspect more communities will adopt UBI as automation takes over some jobs. Jobs that will never come back, and people that will never get their jobs back. Maybe they will train for another job specialization, maybe they won’t. UBI solves either scenarios. I haven’t even dig into the technology/automation part in this post, we’ll save this for another time yeah?
Stop injecting money blindly into the markets. Stop bailing out companies that didn’t save money for a rainy day. Empower the people, empower those who actually you were elected by and are supposed to serve.