The Success of Pandemic Income Support Does Not Mean That Universal Basic Income Works

In Canada, the results of pandemic income support seem to confirm the claims of universal basic income advocates. But to make UBI work, we need to ensure it's coupled with a massive expansion of welfare state policies.

A man walks through the intersection at Yonge and Dundas in Toronto advocating for universal basic income, March 27, 2021. (Steve Russell / Toronto Star via Getty Images)

In the early part of the pandemic, support programs in Canada reduced income inequality throughout most of the country and helped folks make ends meet. On July 13, Statistics Canada confirmed what one would expect to find from the country’s crisis measures. This was particularly the case where the effects of the Canada Emergency Response Benefit (CERB) were concerned. Giving people money helped them manage the crisis and closed income gaps. While they lasted, the programs worked.

According to the statistics agency, the pandemic drove down the percentage of Canadians who receive employment income, especially women and older folks. It also found two-thirds of adults accessed one or more relief programs. The cash from those offerings provided relief from lost revenue and increased after-tax income, except in Alberta and Newfoundland and Labrador. In 2020, household income was up nearly 10 percent, to $73,000. That was good news for low-income earners. As Marie-Danielle Smith writes for the Canadian Press, “Despite fewer Canadians receiving employment income during the pandemic, the transfers pushed the low-income rate down to 11.1 percent in 2020 versus 14.4 percent in 2015, the largest decline since 1976. Statistics Canada also attributes a decrease in income inequality to the programs.”

Proponents of universal basic income (UBI) have jumped on the findings, arguing the rise in income and decline in income inequality support the case for the program. But while the findings may back the promise of UBI, the current political reality calls for caution, reflection, and a deeper look into the power dynamics of pursuing the idea.

The problem of low income hasn’t been solved by pandemic supports, though that was never the point. The gains made in the early pandemic won’t last because they weren’t designed to. Pandemic emergency measures were just that — emergency measures, hustled out the door in real time as a novel crisis threw everyone for a loop. Now, as StatsCan notes, these temporary pandemic supports are gone and “some of the most striking developments for 2020, specifically the strong growth in household after-tax income and the drop in income inequality and in the low income rate, are not expected to continue in 2021 and 2022.” What does that tell us about a potential future for UBI?

While the basic claims of UBI advocates are borne out in the initial data on pandemic supports, the program can’t succeed on its own, and there’s no reason to believe any universal income program that can be won in the current political context is one worth winning. In fact, it’s a potential minefield for the Left — to avoid a number of serious design challenges, any such approach to the problems posed by capitalism must be taken with extreme caution. The premise of never ceding an inch on social welfare programs must be the starting position. And this position must be coupled with a commitment to UBI that is maximally inclusive and adequate. Only then can UBI schemes even be considered a strategy for attaining basic income.

At the most basic level, the serious left approach to UBI requires there be no dismantling of supports and socialized programs such as disability and health insurance. It must also ensure that the amount is not so low that it reduces wages and creates worse jobs. It’s difficult to know whether the aims of UBI are feasible even under its most maximalist implementation.

In 2017, Daniel Zamora, in his case against UBI, covered the risks of a minimalist UBI. As Zamora concludes:

No existing economy can pay for a generous basic income without defunding everything else. We would either have to settle for the minimalist version — whose effects would be highly suspect — or we’d have to eliminate all other social expenditures, in effect creating Milton Friedman’s paradise. Faced with these facts, we should question UBI’s rationality; as Luke Martinelli put it, “An affordable UBI is inadequate, and an adequate UBI is unaffordable.”

The upshot of Zamora and Martinelli’s points is that, for UBI to work, it must accompany an economic transformation that would, as the former puts it, “constitute an exit from capitalism.”

Zamora understands that the central threat of UBI implementation is tied to relations of power. “If UBI does take shape,” he writes, “current power relations will favor those who have economic power and want to profit by weakening the existing system of social protection and labor market regulations. Who will decide the monthly amount and who will dictate its terms and condition? Who do today’s power relations favor? Certainly not the worker.” Even if the promise of UBI were to work in theory, what is the theory of change that produces the ideal version of it in practice? Or even a version worth having that couldn’t be more likely attained, or approximated, through increased and expanded supports for existing programs?

Making the case against UBI in Canadian Dimension last year, John Clarke raises the same concern surrounding expectations about what the program would look like, in practice, should we attempt to implement it now. Supporters of UBI cut across the political spectrum, with cases being made from the left, center, and right. But whose vision would be most likely to win the day in a political struggle over program design? Probably the same ones who run the show and carry the narrative right now. “Elon Musk, Pierre Poilievre and the Canadian Chamber of Commerce,” Clarke says, “are probably in a stronger position to control the basic income narrative than people like me.” Clarke is correct. And that means that UBI requires very thorough considerations.

The Left may be making some gains in Canada on pharmacare, dental care, and child supports. There is nothing about the implementation of UBI that bolsters these uncertain gains. If anything, UBI could be used as cover for pulling back supports on which we have not yet even secured guarantees. Much is made about the bipartisan support for UBI. This is naive. The reason conservatives, particularly libertarians, and the Poilievres of the world support UBI is because it can be used as a fig leaf for gutting existing social welfare and forestalling new programs.

Whatever the potential merits of UBI in theory, the biggest fight is in practice. The CERB data may indicate the plausibility, even the fact, of its primary egalitarian merits. But the political reality of the collapse of pandemic program supports and the abandonment of low-income folks as inflation surges and recession looms is just as illustrative. That political reality tells us what a UBI fight would look like in practice, and whose vision of the program would likely carry the day as things stand.

As Dan Darrah put it in 2020, “For now, UBI’s backers are mostly frolicking above conflict in the realm of the apolitical.” With a few exceptions, such as the New Democratic Party’s Leah Gazan, there hasn’t been much reason to believe that has changed. If the Left wants to take UBI seriously, it must take politics and power seriously while advocating for an economic transformation to be part and parcel of a UBI program — not a mere outflow of it. UBI can only work if it is a co-component in creating the exit from capitalism Zamora discusses. It’s got to be a package deal without room for compromise. Proponents of UBI must pay attention to the entire chessboard, accounting for the asymmetry of the pieces on either side. Otherwise, a well-meaning left movement might find itself in checkmate when it gets what it wants — and end up losing more than it had.