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Basic Income as a Developmental Aid

Paper Type: Free Essay Subject: Finance
Wordcount: 2481 words Published: 14th Jul 2021

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The lifespan of humans can be both affected by the environment and their genetics from their time of conception and birth and it continues throughout. Every stimulus has an effect on the developing brain, it can be both, positive or negative. Early experiences such as stress during pregnancy, soothing a crying infant, neglecting a toddler and many more examples have implications in the future. Parents overlook this stage of life due to personal, marital, and most importantly financial issues that are exhausting their lives. They fail to recognize the harms they are causing unknowingly.

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The goal of the Ontario Basic Income Pilot project was to take a new approach in the increasing poverty in the province. The increasing poverty not only affects us economically but it effects our future generation developmentally. The pilot was run in three locations and were divided in two groups. The first group consisted of 4,000 individuals receiving basic income while the second group that consisted of 2,000 individuals, did not receive basic income from the government.

The main objective of the Ontario Basic Income Pilot was to test how basic income might benefit low income households with food security, stress, anxiety, mental health, healthcare usage, housing stability, education, training, employment and labour market participation.

Even though basic income can be very expensive for governments, all individuals deserve a right to a basic income because then only parents can focus on children’s social and cognitive development due to less financial stress, and help their children reach optimum development.

Stress and Children

Stress, is the way our body reacts to danger or threat. It is best represented by ‘fight or flight’ reaction also known as stress response. As adults, we face multiple stressful situations in our daily lives such as financial insecurity, marital conflict, depression, to name a few. Adults are responsible for being reliable and supportive towards children because children are dependent on them.

However, due to financial stress, job insecurity, marital conflict, and, domestic violence, these are examples of how stress becomes part of many children’s life in low income families. The effects of stress occur even before birth. Chronic stress during pregnancy leads to improper fetal development, heightened physiological reactions, lower birth weight and lower metabolism (Thompson & Haskin, 2014). Severe chronic stress shows dysregulation in functions of cortisol, a stress hormone. A continuous high cortisol level results in high blood pressure, high heart rate and inflammation causing an undesirable immune system (Thompson & Haskin, 2014). Cortisol has dispersed effects on the brain which alters the nervous system’s reactivity and the immune system simultaneously.

Consequently, repeated chronic stress affects gene expression which results in physiological effects (Thompson & Haskin, 2014). Lastly, the mentioned stresses can result in children experiencing poor impulse control, difficulty in planning, paying attention in school, and lack of controlling their emotions.

Abused childhood on Economic Outcomes

Abuse and maltreatment during early stages of life development has a lifelong effect. Maltreatment can be in the form of malnourished meals, shortening meals, running out of food stamps, being behind rent and utility bills, losing social benefits, and immediately family members losing a job. Abused children become depressed during adolescence, which eventually leads to substance abuse and ultimately lacking in educational attainment. In some other cases, youth enter parenthood quite early and fall into financial strain during pregnancy and parenthood. According to studies in New York, children that suffered neglect and abuse in their childhood, are more likely to experience lower socioeconomic status in their adulthood (Henry, 2018). Social policies and family-friendly work polices can immensely help surpass appalling outcomes. In conclusion, all types of abuse are associated with the economic status of the parent (Henry, 2018).

Thus, we can agree that a secure basic income from the government can result in prevention of child maltreatment as there will be no financial strain to meet the child’s needs and can also break the cycle of poverty and improve socioeconomic status of an individual or families.

Parenting under Stress and Support

In the early 1990s, Ireland received an increase of asylum seekers primarily from Asia and Africa. To be able to cater new immigrants and their own struggling economy, Ireland introduced the Dispersal and Direct Provision Policy. The policy eliminated the chances for asylum seekers to apply for any social welfare (Ogbu, 2014). The new policy was designed in the means of meeting basic needs such as food and shelter. However, the living standards in such facilities were degrading and inhuman. Large families were cramped in a small room with several children. There was no privacy due to overcrowding. Most shelters had canteens which followed strict dinning times, poor quality of food and inconsiderate of any dietary restrictions. The Direct Provision Policy was criticized as inhumane and pernicious (Ogbu, 2014). The drawback of this policy was the fact that there was no cash transfer for the migrant families. For example, these migrant families were not able to afford school supplies, clothes, taking the bus, thus they were socially isolated by society due visible low socioeconomic status. Furthermore, parents faced great hardship such as inadequate housing, lack of recreational facilities for children, educational barriers, and financial stress all of which were caused by the Direct Provision Policy (Ogbu, 2014).

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These hardships led to poor mental health amongst parents and children. These migrant children grew up in the fear of not knowing about their future while experiencing prejudice due to their race, religion and culture. As a result of being discriminated these children grew up with inferiority complex. In this case, the parents’ effort to raise their children the best possible way they could, it just was not possible because every migrant was forced to live under the Direct Provision (Ogbu,2014). The living situations were not humane, but the most affect that had on children’s lives was the financial strain. The fact that they weren’t able to afford minimal costs had greater effects in their social development.

Micro Investment Perspective

The idea of Basic Income as a developmental policy tool, has been discussed around the world since the 1950s. For many years, basic income was considered Social Cash Transfer (SCT) as a tool for the less fortunate. Some of the best known SCT schemes are Brazil’s Bolsa Familia, Mexico’s Oportunidades, India’s National Rural Employment Guarantee and South Africa’s Old Age Pension and Child Support Grants (Eskelinen & Perkio, 2018). These schemes were either conditional cash transfer i.e. a guaranteed monthly income conditioned on child’s school attendance or targeted cash transfers provided to selected groups. Such SCT programs have demonstrated improved health, decreased extreme poverty and increased school attendance rates. However, these policies didn’t reach all individuals especially the very poor as they are focused on targeted groups, villages etc. The policies had discrepancies about eligibility or ineligibility for receiving STCs. In the article, Micro-investment perspective and the potential of the universal basic income, the author looks at Basic Income as a social policy rather than a SCT. It is argued that an unconditional modest monthly income will support families flourish as an addition to their regular income. The article suggested that BI should be universal and despite of any eligibility quotas. The Basic Income Pilot program was organized in Namibia and India, where 62% – 82% (depending on scale) and 30% of the population live below poverty line respectively (Eskelinen & Perkio, 2018). The program ran for two years in both developing countries. The data was compared according to labour, behavioural impacts, psychological impacts and investment in human capital. After two years, both projects showed similar outcomes. There was an increase in own initiative small businesses, increase in work hours and days, as well an increase in cumulative household income. There was also an rise in outside investment to generate more income, an increase in livestock ownership and producer goods. The basic income promoted self-employment and personal growth of an individual. Thus, the policy can be seen from a micro-investment perspective. The unconditional monthly income facilitated villagers to generate money, stabilized financial security and created self-employment opportunities. Most importantly, the biggest effect was the psychological impact of stability and hope in a household. They were much happier and empowered to work for a better life (Eskelinen & Perkio, 2018). In conclusion, Basic Income should not be undermined as “free money”, it should be viewed as a micro-investment for an ultimate goal in human capital, and therefore, government will have a bidirectional investment for their country’s future.

Business Response to Basic Income

The idea of BI was introduced in the 1970s by D. B Smith a businessman and a chartered accountant however, it was perceived negatively. Business owners were anxious about how the BI would affect their business. They were worried that employees would quit their jobs and live a lifestyle on from BI. There were many disagreements due to the lack of a concrete policy and misunderstandings of BI. BI was meant to be an unconditional monthly income for all to achieve a basic standard of living (Calnitsky, 2018). In 1970, Mincome was introduced in rural areas of Manitoba and Winnipeg. This pilot project was designed to assist the low-income individuals and families achieve a better standard of living on a monthly basis. However, this pilot was abruptly stopped and no final report on the effects of the additional income was produced. The main criticism of Mincome was the supposedly negative effect on local businesses, labour market and unwillingness to work. These claims cannot be proven due to the unfinished experiment and lack of data. If Mincome was to reintroduce today, the policy needs to carve concrete outlines of universality, eligibility and unconditionality. Most importantly, the government would have to find sources and funding for BI before exhausting the idea of higher taxes.

Ontario Basic Income Pilot Project

The Ontario Basic Income Pilot Project was introduced in April of 2017 to approach a new and sustainable way to reduce poverty by former Liberal Premier, Kathleen Wynne in Hamilton. The goal was to provide a basic monthly income regardless of employment status. Unfortunately, the project has been shut down by the newly elected Progressive Conservative government; thus we are not able to conclude any benefits of the project with the incomplete data available.

Nevertheless, we can conclude that the notion of providing a minimum monthly income to those in need and those living below poverty line compared to the rest of the province is not outrageous. The benefits of supporting parents in the most crucial developmental phase of their lives is beneficial to the society as a whole. When we are assisting parents financially we are also creating a safe environment for the children to be born and raised. We are advancing secure attachment between the mother and the child. This support, filters out the leading cause of stress by providing financial stability. When the parents of an unborn child are at peace with monthly income, they are more motivated and willing to work hard and grow their income by their own initiative. These children will be raised in a proper environment because all their developmental needs will be met. We should look at BI as an investment and developmental tool to empowering future generation. These effects will be transgenerational and bidirectional just like the pilot projects in India and Namibia (Eskelinen & Perkio, 2018). A Basic Income would alleviate the negative effects of financial stress and furthermore invest in our cognitive, psychological and physiological development.



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