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Want to Motivate Poor People? Give Them Money

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Poverty is a hot topic right now. Unfortunately that conversation includes people such as Kevin O'Leary, who thinks "it's fantastic" that 85 rich people hold the same amount of wealth as the poorest 3.5 billion. "It's fantastic" is something you say about a delicious canapé at a cocktail party -- not widespread poverty.

I know, I know. O'Leary is paid to say inflammatory things, but he is certainly not the only person who believes it's just a wee bit of drive that separates the poor from their white-picket-fence dreams. To say 85 people serve as "the motivation" everyone else needs to be the next Bill Gates is to admit that you've never spent time with anybody who makes less than $60,000 a year.

To set and meet goals, you have to think long-term. When you're poor, you can't focus on the future (and Bill Gates wasn't raised poor, by the way). You worry about finding boots, not pulling up your straps. The best way to "motivate" poor people is with programs that help lift their gaze from the ground to the horizon. A guaranteed annual income program would do that.

The idea is simple: in place of a complicated welfare system, give people enough money to live above the poverty line in their region (Ontario's Low Income Cut-Off was $22,229 for a single person in 2011). No strings attached. The less you make, the more guaranteed income you receive.

The concept dates to the 16th century but has resurfaced thanks to the Basic Income Pilot, a group that wants the Liberal party to adopt the policy at its convention in February. In countries ranging from Brazil and Namibia to Norway and France, some version of the GAI model has been successful. Canada experimented with the idea during the mid-1970s. In Dauphin, Man., the government gave more than 1,000 families a four-year guaranteed income to help keep them out of poverty. Crime rates and hospital visits dropped. Education enrolment surged. Nobody sat around in sweatpants eating Cheetos. They used the extra resources to make plans.

In a study published in Science, researchers found proof that poor people prioritize short-term goals detrimental to their future. While these decisions seem like self-sabotage to the Kevin O'Learys of the world, they make sense if you consider how poverty shapes mentalities.

A Huffington Post blog post written by a woman in poverty vividly describes her thought process: "There's a certain pull to live what bits of life you can while there's money in your pocket, because no matter how responsible you are, you will be broke in three days anyway ... We don't plan long-term because if we do we'll just get our hearts broken. It's best not to hope. You just take what you can get as you spot it."

Just getting on social assistance is a commitment to poverty. To receive it in Ontario, you can't have more than $1,657 in liquid assets, which could mean selling a car or giving up savings to qualify. There are at least five administrative steps to continually get welfare. Once you're in the social assistance system, there's not much incentive to leave.

The phenomenon is known as the "Welfare Wall" -- the point at which working a minimum-wage job costs more than collecting a government cheque. Vac Verikaitis is afraid of running straight into it. The 56-year-old who blogs for HuffPost was a sports TV producer for Formula One motor racing in the '90s until his addictions and a divorce robbed him of savings and support. He now lives in a 50-square-foot apartment in Toronto's Evangel Hall Mission. He receives $850 from the Ontario Disability Support Program each month because of his arthritis and depression.

Seven years after Verikaitis hit rock bottom, he is trying to find a media job. The lack of opportunities isn't his only problem; a job might actually make things worse. "My rent will go up ... I will have to pay federal income tax and child support for years," he says, sitting in his cramped bedroom. "Even if I do work and come back, I probably won't be further ahead. But if I don't do it, I'm going to die."

As soon as a welfare recipient starts making any real income, social assistance benefits, subsidized housing and prescription drug money are all cut to some degree. The GAI program would still guarantee any employed person below the poverty line a top-up to, you know, encourage rather than punish their progress.

For now, the only routine Verikaitis can consistently keep is to bring an extra mug of coffee up to his room from the soup kitchen downstairs. In the morning, he likes to drink it cold. It's a pattern he can commit to. But goals? Real goals like losing weight, finding a job, reconnecting with his daughters? Much harder. Meeting those is a luxury for rich people.

Many critics of the GAI, ironically, suffer from their own inability to think long-term. They complain about the initial costs, which in Canada could be anywhere from $30-to-$50 billion per year. But over time, the recipients' lifestyle changes drive the price down. GAI income could reduce crime costs by $1-2 billion and health-care costs by $7-8 billion annually.

If we could just accept the mound of data showing poor people aren't degenerates who don't set their alarm clocks early enough, there would be more support for programs that give people enough money to think ahead. That, Mr. O'Leary, would be "fantastic."

Canada's Richest People, 2013
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This article previously appeared in the Ottawa Citizen.