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‘Mincome’ A Possibility in Switzerland

‘Mincome’ A Possibility in Switzerland

by Tyson Kelsall, Culture

In Switzerland, a grassroots citizens’ committee collected the 120,000 plus signatures needed for a referendum about a guaranteed livable income for all Swiss adults. A Guaranteed Livable Income (GLI) is a social assistance payment to all the working poor and unemployed people, so that they may reach the poverty line and be able to afford their basic needs, and possibly a little more depending on the ideologies behind it. The number being proposed is 2,500 Swiss Francs per month, which at the time of this article, translates to 2,850 Canadian dollars. In comparison, the basic welfare amount in British Columbia for a single adult is $610 per month, and someone living on welfare is only allowed to make a maximum of $200 or else they lose all support.  

The idea of a GLI has been debated in North America ever since the end of the Second World War. In 1974, Pierre Trudeau’s Liberal government and the Manitoba NDP ran an experiment in Dauphin, Manitoba. In Dauphin, a town that had relatively low economic status, the government gave all the poorest citizens a basic income that matched the poverty line for four years, which ended up being approximately 1,000 people. The belief that people would work less without an economic incentive was strongly challenged by the Dauphin experiment, where equal or more work was done, except for in two segments of the population: new mothers and teenagers. Of course, the economic assistance freed up the mothers to look after their newborns and allowed teenagers to attend school. Hospital visits dropped by 8.5 percent during the four year experiment; in a system with universal healthcare, as in Canada and Switzerland, this is a direct benefit to the taxpayer. It all came to a quick end when a nasty recession hit Canada in 1978.  

The idea was based on several different theories; however, many supporters of GLI look to Henry Ford’s situation in 1914. Ford decided that he would double the wage for his assembly-line workers from $2.50 a day to $5.00. This had a tremendous effect for his business. Not only were his workers happier and more likely to stick around, they also had more money to purchase Ford’s vehicles. As Ford said himself, “It is not the employer who pays the wages. Employers only handle the money. It is the customer who pays the wages.” By keeping experienced workers around, the productivity of his manufacturing plants increased,  meaning more buying power for all consumers on a macro scale.

Famous economist, Milton Friedman, (popularly known for his studies in free-market and neoclassical theories at the Chicago School) also believed in a sort of basic income. It was in a different form, called a “negative income tax” (NIT). In brief, this system would work by having the population send their taxes to the IRS, if they fell below the amount needed for their basic rights, the IRS would send them a cheque to fill that cavity. For example, if the GLI was $35,000 per year and somebody made $29,000 they would receive a $6,000 dollar payment. According to the theory, it would cut some of the cost of providing welfare because of the infrastructure already being in place, as people must already fill out income tax forms each year.

In British Columbia, the concept of a GLI was brought up the 2013 election. Jane Sterk and the BC Green Party came out saying that they would initiate a commission to look into the best ways of implementing a GLI if they somehow won the election. Adrian Dix and the NDP proposed doubling the amount of income you could receive while on welfare to $400. If combined with welfare, a single person could then make $1010 a month. However, employment would still not be guaranteed.

In Switzerland, democracy is more much direct than in Canada, and it is much easier to start up a citizens-based referendum. For example, on 24 November 2013 the Swiss will also vote on something called the “1:12” initiative. This will be a type of maximum wage that executives will be bound to; they will only be allowed to pay themselves monthly what an average employee makes in a year if the policy is voted in.