Why A Guaranteed Annual Income Is Unlikely to Solve Poverty

An idea that would fundamentally change the way governments provide income support has received renewed attention in Canada and around the world. The idea: replace the current complex tangle of government income support programs with a single cash transfer to individuals or families — without conditions such as requiring recipients to work — that ensures some minimum level of income. In Canada, the program is generally referred to as a guaranteed annual income (GAI).

The concept has been debated for decades but recent events have brought it back in vogue. Most notably, delegates at last year’s Liberal Party of Canada Biannual Convention endorsed a GAI as a policy resolution and Switzerland will soon be holding a referendum on creating a Swiss GAI. Despite the renewed interest, a GAI reform isn’t likely in Canada due to arguably insurmountable implementation hurdles.

Critically, a GAI must be a replacement, not an add-on, to the existing income support system. With the cost of the existing system (including spending and tax measures by all levels of government targeting people with low-income, the disabled, the elderly, and parents with young children) estimated at $185 billion in 2013, or roughly 10 per cent of the economy, this would be a major undertaking.

According to Statistics Canada, cash and in-kind government transfers to people (referred to as “social benefits”) account for 22 per cent of program spending by all levels of government. A GAI would therefore require reforming about one quarter of total government activity — not a small policy reform by any measure.

The GAI’s main appeal is the potential to reduce government administrative costs by simplifying the income support system which consists of numerous, often-overlapping programs at the federal, provincial, and local government levels. A single program providing an unconditional transfer would do away with administrative duplication and not require an expensive monitoring apparatus to ensure recipients comply.

In theory, the potential for administrative savings is substantial. A non-trivial portion of spending on income support currently goes to administration rather than directly on transfers to people.

But in practice, a GAI that maintains its conceptual simplicity and produces administrative savings is unlikely to be implemented in Canada.

It would require the federal and provincial governments to first agree on a comprehensive reform with at least one government level abdicating its power and responsibility in the existing income support system (remember: local governments also provide income support through, for instance, social/subsidized housing).

If the federal government administered the GAI, as most proponents envision, every provincial government would have to stop providing social services programs such as welfare. At the same time, federal programs (such as Employment Insurance, Old Age Security, the GST/HST Credit, and many others) would have to be integrated into the new GAI program.

Many provincial governments, especially Quebec, have historically been reluctant to cede powers or responsibilities to the federal government. This may be particularly the case when it comes to social services because it is key component of provincial government policy-making, representing 11.7 per cent of combined provincial government program spending in 2012/13.

Since building sufficient agreement among Canadian governments for much more modest reforms has encountered major difficulties (read: a national securities regulator), it seems highly unlikely that agreement could be achieved for a reform as wide-ranging as a GAI.

Strong internal political pressures would also exist in terms of opposition to the large-scale lay off of bureaucrats which is required to achieve substantial administrative savings.

The risk is that a GAI would become just another program within a larger web of existing government programs. Some programs that target specific groups, particularly groups less able to work — such as the severely disabled or the elderly — may be difficult to consolidate into a single “one-size-fits-all” universal program like the GAI.

But if some programs are preserved, this would bolster the argument for making further exceptions. As more programs are preserved, the potential for administrative savings diminishes, undermining the main advantage of a GAI.

So while a guaranteed annual income may sound like an appealing idea in theory, in practice it’s not likely to deliver.

This piece was co-written by Hugh MacIntyre, Fraser Institute analyst.

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What the Arab Spring Taught Us About the Right to Earn a Living

Things seem to be looking up for the small North African nation of Tunisia. The Arab Spring ignited there four years ago when a desperate street vendor set himself on fire has been a brutal disappointment in most countries, but Tunisia itself is an exception. In 2014, it adopted a widely hailed new constitution, and held both parliamentary and presidential elections as the year drew to a close. The newly elected president just named his prime minister, and The Economist just named Tunisia the 2014 country of the year for its “pragmatism and moderation” in an otherwise troubled region.

Yet to fulfill its promise, the country will need more than just a shiny new democracy. It will also need leaders who have learned the real lesson of the Arab Spring. The dramatic event that touched off months of protests, and led to the overthrow of abusive authoritarian regimes in several countries, was not primarily about the right to vote. It was about the right to work.

Mohamed Bouazizi was a street vendor in the remote Tunisian village of Sidi Bouzid. He supported his mother, uncle and five siblings by selling fruits and vegetables in the local market. Yet nearly every day, he was harassed by local police officers, the very people whose job it is to protect people and their property. They would confiscate his scales and his produce, or they would fine him, ostensibly for running a stall without a permit. He was once fined the equivalent of two months of earnings.

On December 17, 2010, police again robbed the young man of his merchandise and his tools, slapping him and forcing him to the ground when he tried to resist. After trying and failing to get his property back and file a complaint with an official, he decided that he had had enough. Outside the local municipal office, at the ripe old age of 26, he immolated himself in protest, and started a revolution. He died of his burns two and a half weeks later.

What is too often ignored or glossed over in much of what has been written about this incident and the events that followed is that it was a protest not so much about fighting for democracy writ large, or against injustice per se. What Bouazizi so desperately lacked was something much more basic than the right to choose his rulers; what he needed most was limits on what his rulers (and their agents, the police) could do to him. He could not accept that he should be denied the simple right to earn an honest living so that he could support his family.

It was not primarily about politics. It was about economics. It was about doing business: the freedom to work and to seek out business opportunities. And it was about accumulating capital — in Bouazizi’s case, in the form of saving up to buy a van instead of having to pay fines and bribes to law enforcement officials who kept seizing his means of earning a living.

“What kind of repression do you imagine it takes for a young man to do this?” one of his sisters asked at the time, complaining about the fines and confiscations her brother endured for so long, until he could endure them no longer. “In Sidi Bouzid, those with no connections and no money for bribes are humiliated and insulted and not allowed to live.”

As reported by his friend Jamil, another vendor, Bouazizi’s ultimate, exasperated plea just before he lit himself on fire illustrated eloquently the economic roots of the uprising that came to be called the Arab Spring: “How do you expect me to make a living?” It is a plea the newly minted Tunisian government would do well to keep in mind as it begins to govern.

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CES 2015: SVALT Launches Stylish Cooling Dock for Apple MacBooks [Mac Blog]

SVALT today announced the launch of a new cooling dock designed for Apple MacBooks and select PC laptops, which the company promises offers a 12x improvement in cooling, 129 percent improvement in CPU power, and 53 percent improvement in CPU Turbo Boost by eliminating CPU throttling due to heat issues.

Created from solid aluminum and designed to match up with the style of Apple’s MacBooks, the two-pound SVALT D is compact and holds a closed MacBook vertically in a dedicated ledge. A 12-volt fan sends air through the laptop’s closed screen to reduce system temperatures while allowing GPU resources to be used for an external display.

svalt

Transform your laptop with a level of performance and functionality previously limited to the highest-end desktop computers. Heat buildup in the laptop negatively impacts performance and long term durability. Anchored by the passive cooling capacity of a highly engineered 2 pounds of aluminum, SVALT D enhances cooling with a 12-volt 80x25mm fan to drive airflow through the laptop’s closed screen position air vent. Airflow is directed over the internal electronic components and bottom panel, feeding cool air into one or more of the laptop’s fans and driving waste exhaust air out vents, flushing out heat.

The company says that real world results using the SVALT D will depend on the laptop used, the workload, and ambient temperatures, but it detailed testing on a 2012 11-inch MacBook Air:

– Fan: Red 1600-1700RPM
– Environment: 21 Celsius +/-1 and 50dB +/-5 office standards
– Cooling: 13C increase without SVALTTM D verses 1C increase with SVALTTM D
– Power: 0.748W increase with SVALTTM D verses -2.616W reduction without SVALTTM D
– Turbo Boost: 1.000GHz increase and sustained max Turbo Boost with SVALTTM D verses a throttled 0.653GHz increase without SVALTTM D
– Noise observation: slightly louder than background noise at 2ft from front

svalt2The dock ships with a power supply and it can be used with the fan on or off. There are two fan options — a higher-powered red fan that runs at 1700RPM/15 dBA and a quieter Yellow fan that runs at 1200RPM/12 dBA.

The SVALT D works with current-generation MacBook Air and Retina MacBook Pro computers, including 11, 13, and 15-inch models. The SVALT D is currently in production, and the company plans to begin taking orders in February. The dock will be priced between $130 and $150.



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Nest Teams Up With Automatic for Energy Saving Temperature Tweaks Based on Vehicle Activity [iOS Blog]

During CES 2015, Nest announced a number of new partnerships, including one with auto accessory maker Automatic. For those unfamiliar with Automatic, the company produces an easy-to-use OBD port accessory that plugs into a range of different vehicles to provide at-a-glance car information on the iPhone.

Automatic’s Connected Car Adapter is now capable of interfacing with the Nest Thermostat, letting customers create new interactions that will allow the Nest Thermostat to be adjusted based on vehicle activity.

For example, users can create a setting in the Nest app that wakes the Nest up when the car gets near to the house, or set it to Away mode when leaving to save energy. The Nest and Automatic integration allows the thermostat to detect the location of the car, so it’s possible to set the Nest Thermostat to adjust house temperatures as a user is driving towards their home.

A wide variety of rules can be created through the new integration between the two products, using filters for location, time of day, day of the week, and more, for more precise control over temperature when away from the home.

automaticnest

The Automatic integration offers customers a chance to maximize potential savings through intelligently chosen rules that give the Nest thermostat a more timely understanding of when heating or cooling is needed–and when it’s not needed.

“At Automatic, we’ve focused on saving people money from the very start with our fuel-efficiency coaching, which has saved many users hundreds per year on fuel costs. Now we’re thrilled to extend the connected car’s benefits into people’s homes, to make life more automated, convenient, and efficient,” said Thejo Kote, CEO of Automatic. “The home and car are people’s two most expensive budget items. The Automatic and Nest platforms now work together to make those less of a burden in every way we can.”

Both Nest and Automatic have been working hard to build partnerships to connect their products to a range of other devices. Automatic, for example, also integrates with the Jawbone UP, select Ford vehicles, and app IFTTT.


The Nest Thermostat now works with an even wider range of products, including Whirlpool washers and dryers, Philips hue lights, Kevo Smart Lock, Dropcam, Rachio sprinklers, August Smart Lock, and more.

The Nest Thermostat can be purchased from the Nest website for $249.

The Automatic connected car adapter can be purchased from the Automatic website for $99.95.



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