UBI in America

Canada

Discussion and implementation

Canada is one of 2 countries where basic income experiments began back in the 2nd half of the last century.

The Basic Income Canada Network was founded in 2008. There is also a civic movement for basic income in the province of Quebec Revenue de base Quebec (RBQ).

In Canada, the Basic Income guarantee is officially supported by the Pirate, Green, Liberal and New Democratic parties, as well as the provincial Québec Solidaire.

At the end of 2001, after the election victory of the ruling Liberal Party, Minister Jean Chretien convened a committee to consider the introduction of an “annual income guarantee” for all citizens of the country without exception. The minister’s proposal drew criticism from the Alliance party, the Separatist Party of Quebec, and the Conservative Party.

In July 2016, a kind of basic income for children, a $500 monthly non-taxable child allowance, was introduced for which 6.4 million Canadians could expect to receive.

By the end of 2019, the Basic Income Canada Network produced a report modelling different social policy options:
1) an option for 18- to 64-year-olds with a family income check: the benefit of $22,000 a year ($31,100 per couple) decreases gradually as income increases; benefits for seniors are retained;
2) similar option with family income verification for all adults, including seniors;
3) an option with the same amount of benefit for each adult without income verification – classic unconditional basic income.

Canada’s 2020 support measures for Covid-19 included, among other things, a temporary increase in the Child Benefit and the Contingency Allowance (CERB). The CERB is a monthly payment of $2,000 for 4 months to every worker whose income in the past 12 months was under $5,000 and who lost their job as a result of the pandemic.

Experiments

The Mincome experiment in Manitoba

The Province of Manitoba experiment was planned from 1974 to 1979 to study the effect of basic income on the labour market. The experiment covered 3 sites:
– Dauphin Township with a population of about 12,000 – chosen as the main base of the experiment;
– Winnipeg with a population of about 450,000;
– scattered agricultural sites – mainly as control groups.

The money was paid out over 3 years: from 1975 to 1977. Technically, the scheme was implemented through a negative income tax – a state refundable tax deduction. All in all, about 10,000 people – citizens aged 18 years and older – received the payments. The amount was set at an amount slightly higher than the “maternity allowance”. At the same time, the amount of payments was reduced by 50 cents from each dollar received by the participant in the form of salary or other income.

Funding for the project was distributed as follows: 75% from the provincial budget of Manitoba and 25% from the federal budget of the country.

In 1976, there was a change in the provincial government, which withdrew further funding for the project due to new priorities. There was enough funding to complete the payments to the public as originally planned, but the remaining small amount of federal funding was insufficient to process and analyze the results of the experiment.

The 1,800 boxes of records were turned over to the archives.

It wasn’t until 15 years later that D. Ham and W. Simpson conducted a study for the Economic Council of Canada based on the data collected in Manitoba.

The main results of the experiment:
– Heads of households continued to work despite the possibility of benefits. Men’s hours worked decreased by only 1% and women’s hours decreased by 3%. Nor did the decrease in employment contribute to the decrease in the amount of project payments on earned income;
– Women stayed home longer after childbirth and devoted time to child care;
– The only group that significantly reduced their work hours (by 40-50%) were young single men who spent more time on education;
– During the experiment, hospitalization rates decreased by nearly 9% due to fewer accidents and injuries, as well as improved mental health. Hospitalization rates continued to decline for another 5 years after the payments ended;
– More teens began moving up to 12th grade to complete their schooling rather than dropping out of school to make a living. As a result, these teens found better-paying jobs than their peers. The trend toward full-time schooling increased dramatically in the next 3 years after the experiment ended;
– Girls were less likely to become mothers before age 25;
– The number of volunteers increased, and community activism increased;
– Most beneficiaries were able to move above the Canadian poverty line.

Experiment in Ontario

In 2017, the Liberal government launched a 3-year experiment in Ontario. The project targeted low-income people aged 18 to 64 and covered 3 communities:
– Hamilton with a population of about 520,000;
– Thunder Bay with a population of about 110,000.
– Lindsay with a population of about 20,000.

Hamilton and Thunder Bay had 1,000 recipients and 1,000 control group each, and Lindsay had only 2,000 recipients.

The amounts paid out were ranked as follows:
– Up to $24,000 per year per married couple;
– up to $17,000 a year for single participants;
– up to $6,000 per year for disabled persons.

The set maximum payout amount for the pilot was reduced by 50 cents on every dollar a participant received in wages or other income.

In June 2018, a new Conservative government came to power and canceled both the project itself and the funding to analyze its results. By this point, the experiment had lasted just over a year. The results analysis stopped in June 2018, and payments to recipients stopped in March 2019.

A report with the results of the study, prepared by McMaster University, was not published until March 2020.

Key findings of the study:
– documented improvements in participants’ health and physical well-being: improved overall well-being (79%); increased physical activity (74%); less fatigue (71%) and pain (57%), improved childhood well-being (69%);
– improved mental well-being: overall improved mental health (83%), reduced frequency of stress/anxiety (86%), depression (83%) and anger (78%), greater self-confidence (81%) and a more positive outlook on life (86%)
– fewer visits to health care: fewer visits to doctors (33%); fewer hospitalizations (37%)
– improved health care: were able to afford dental care (74%), medicines in pharmacies (83%) and professional advice (50%)
– The use of tobacco (56%) and alcohol (48%) declined;
– Food security has improved: improved diet (86%), increased use of vitamins (85%), reduced intermittent eating (69%) and the use of canned foods (68%)
– improved housing security: increased availability of household items (85%) and basic clothing (86%), improved overall housing situation (46%)
– financial well-being of participants improved: ease of paying off debts (60%) and getting around the city or region (78%), reduced use of payday loans (91%), increased financial preparedness for emergencies (75%) and reduced dependence on family or friends for financial support (84%);
– positive changes were recorded in the social sphere: more time spent with relatives (69%), improved relationships with family members (66%), increased volunteering (48%), more time devoted to personal hobbies (73%), increased socialization with others (74%).

Of particular note are the results in terms of working hours and employment of the participants:
– 54% worked before and during the experiment;
– 24% remained unemployed before and during the pilot;
– 17% were employed before the project, but did not have a job during the project;
– 5% did not work before the experiment but found a job during the pilot.
41% of those who stopped working during the experiment went back to school to increase future employability.

Those who worked both before and during the experiment reported an increase in their pay (37%), better working conditions (31%), and job security (27%).

All participants noted other job-related improvements: finding a job more easily (61%), staying motivated to find a better job (79%), and starting a school or educational program (26%).

Almost all respondents indicated that canceling the project caused them to put certain life plans on hold or give up.

Brazil

Discussion and implementation

Brazil is the only country in the world that adopted the Basic Income Law back in 2004 (Law 10.835/2004). Article 1 of the Law states: “Since 2005, a basic citizen’s income has been established, which represents the right of all Brazilians living in the country and foreigners residing in Brazil for at least five (5) years, regardless of their socio-economic situation, to receive an annual cash benefit. The bill was introduced by the Workers’ Party and was instantly approved, receiving neither criticism nor opposition. Unfortunately, the Law remained only on paper; most of the population had not even heard of it.

Shortly before the Law was passed, in 2003, Brazil approved Bosla Familia, the largest low-income family support program in the world. The program is described in more detail below.

The Brazilian Social Democratic Party (PSDB) and the Brazilian Workers’ Party (PT) support the basic income. The basic income movement Rede Brasileira de Renda Básica de Cidadania has been active in the country since 2004.

In July 2020, 220 federal deputies and senators formed the Parliamentary Front for the Promotion of Basic Income. Former Senator Eduardo Suplicy, author of the 2004 Basic Income Law, was invited to serve as President of the Front.

In April 2020, the “extraordinary basic income” program was adopted: a three-time payment (later extended to 4 months) of R$600 ($120) per month, with a means test for those aged 18 and older. To qualify, income must be less than one-half of the minimum wage (R$552, or $110). For single parents, however, no income threshold was set, and the amount was 1,200 reais per month.

Low-income family support program Bolsa Familia

The Bosla Familia program was introduced in 2003 by the government of President Lula da Silva. The main goal of the project was to reduce poverty through direct payments to low-income families. The allowance amount was 32 reais ($19) per child attending school, up to a maximum of five children.

The requirements for the family were:
– Per capita income below R$140 ($82) per month (the poverty line);
– In return, families had to take their children to school and visit hospitals regularly for preventive examinations.

Single parents were entitled to priority payments.

Merging previous programs to support poor families into a single system simplified payments, reduced bureaucracy, and saved administrative costs. The total cost of the program was less than 1 percent of Brazil’s GDP and about 2.5 percent of total government spending.

By 2012, the Bosla Familia program covered 5,500 municipalities, more than 12 million families, that is, about 48 million people – almost a quarter of the country’s population. In terms of the number of beneficiaries Bolsa Familia is the largest cash transfer program in developing countries. 63 countries sent their experts to study the Bolsa Familia program.

Key results of the program:
– A 40% decrease in infant mortality https://www.theglobeandmail.com/news/world/what-would-robin-hood-do-how-cash-handouts-are-remaking-lives-in-brazil/article16113695/?page=1 over 10 years. This is one of the sharpest declines ever seen. And the sharpest declines are in the poorest neighborhoods;
– Reduced income inequality: between 2003 and 2009, the income of the poorest Brazilians increased seven times that of the wealthiest citizens;
– Reduction in extreme poverty: The poverty rate has more than halved in 10 years;
– Improved school performance: school enrollment was nearly 100%, and children receiving the benefit were nearly twice as likely to graduate as those not receiving it;
– Improved health of recipients;
– Increased dignity and social status for women: the benefit recipients have more autonomy in decision-making and have more equal relationships with their partners;
– The emergence of small businesses in poor areas due to increased household consumption;
– Rural development;
– Reduction of regional inequalities;
– Retention of work aspirations: 75% of adult recipients are working, and most of the unemployed live in areas where there are no job prospects.
Despite the program’s effectiveness, according to 2018 data:
– 31.1 million Brazilians (16% of the population) did not have access to tap water, and 72.4 million (37% of the population) lacked adequate sanitation;
– 25.3% of Brazilians lived in poverty.

Step-by-step introduction of basic income in the city of Marica

In 2013, the city of Mirica, state of Rio de Janeiro, enacted Municipal Law n. 2,448/2013, which launched the social program “Bolsa Mumbuca” – monthly transfers of 70 mumbuca to the poorest families with a monthly income of up to one minimum wage (approximately R$1,000, or $200). In return for the payments, families had to take their children to school and visit hospitals for preventive check-ups.

The mumbuka is a local digital currency, equivalent to 1 real ($0.2), designed to stimulate all forms of solidarity economy. Many small stores in Marika accepted payment in mumbuks. Also, the Landless Workers’ Movement Cooperative (MST) sold its goods to supermarkets, which accepted payments in mumbuks from their customers. However, in 2017, only 10 percent of all businesses in Marika accepted mumbuca.

As of December 2015, the municipal law n. 2,652/2015 transformed the Bolsa Mumbuca program into a new Mumbuca Minimum Income project, according to which:
– the amount of monthly payments for families was increased to 85 mumbuca;
– the criterion of need, or poverty, was relaxed – the family must have an income of up to 3 minimum wages (approximately R$3,000, or $600);
– the education and health requirements previously imposed on families in return for benefits were eliminated.

At the same time, the municipal law n. 2.641/2015 approved the Citizen’s Basic Income (CBI) program, under which a monthly basic income of 10 mumbucas was entitled to all persons born in Maricá and living there for at least one year, other Brazilians living in the city for at least 2 years, and foreigners living there for at least 5 years. The new program covered 150,000 residents of the city.

According to the mayor of Washington Cuacua, by this time 14 thousand families, that is 1/4 of the population of Marica, have already received monthly payments under the program “Bolsa Mumbuca”. Thus, a family of 6 since December 2015 was already receiving 145 mumbuca per month (85 mumbuca under the Mumbuca Minimum Income Program + 6 people. *10 mumbuca basic income).

The source for the payment of basic income was determined to be income from garbage processing activities and part of the royalties for oil explored on the sea coast of the municipality.
Along with the basic income, free use of public transportation for the entire population of Marika was introduced in December 2015.

In June 2019, by Municipal Law n. 2.869/2019, the basic income (CBI) was increased from 10 to 130 mumbuks ($25) per person, and the duration of citizens’ residence in the municipality was increased to 3 years regardless of what country they were born in, leaving the five-year period for foreigners unchanged.

Later in the pandemic, this amount was temporarily increased to 300 mumbuk ($56) per person. Now the municipality is preparing for the last phase in 2022, when the need test will be abolished and the basic income will be paid to all who meet the minimum term of residence in the city.

Experiment in the Village of Quatinga Velho (2008-2014, lifelong since 2016)

The nonprofit organization ReCivitas experimented with a basic income in the Brazilian village of Cuatinga Velho, São Paulo state, from October 25, 2008 to 2014.

The program was funded by private donations and funds from nonprofit organizations.

For 5 years, the basic income went to all of the villagers who joined the project with a population of about 100 people. At first there were only 27, but by the end of the experiment there were 93. Participants received a very modest amount of 30 reais ($9) per month.

The main results of the experiment:
– Food quality improved: Meat and fruit appeared in families’ diets;
– People’s health improved: Pregnancies were better without malnutrition, and the baby born to such a mother was in good health;
– Improved health care: a woman with a chronic disease was able to go to a doctor and buy medicine for systematic treatment; buying medicine helped save a child from pneumonia;
– Education has improved: funds were used for school supplies, clothing, and child development without sacrificing household expenses; a child who received glasses learned to read;
– Living conditions improved: People renovated their homes, planted gardens, and built chicken coops and outbuildings;
– There was an opportunity for investment: Two young people were able to buy a motorcycle together to travel around the farms where they worked;
– Financial freedom and security: They were able to repay their debts.

Resumption of the project

In January 2016, ReCivitas launched a new Basic Income Startup. Payments to the 14 residents of the village of Quatinga Velho are now to be made for life. To fund such projects from private sources, the company proposed the creation of a “Basic Income Project Network.”

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Universal Basic Income: pros and cons, countries with UBI