Discourse: The “Basic Income” for all

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Discourse – Let’s talk about big ideas

Aidan Quinn – Editor in Chief


Imagine a world where everyone, regardless of their circumstances was guaranteed an income provided by the government. A Basic Income, if you will, where as a citizen, you are given enough money by the state to live and to spend as you see fit.

This idea is being touted as the next great social reform, one that could eliminate poverty and spur innovation and growth. But, is it really viable to pay every single citizen a living wage (consider paying each of the United State’s 320 million people around $500 a week), and would the benefits really outweigh the cons on such a wide-scale?

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The Finnish experiment

In Finland, the government is currently trialling one of the largest Basic Income programmes in the world. Between 2,000 – 3,000 citizens on unemployment benefits are being randomly selected to receive 560 euros (around $600 USD) a week as the government assesses if the initiative will spur the key goal of getting people back in the workforce.

The study will focus on three key elements: assessing whether the Basic Income can help reduce poverty amongst the participants, if the programme will help simplify and cut down bureaucracy, and see if it helps to increase the social inclusion of these marginalised people. It is hoped that the programme will help remove the disincentives embedded in social security by giving participants more freedom with how they spend their money and hopefully spur them to look for more work or better education without the prompting of the state.

The implications of this trial are being closely watched by governments around the world. Currently, similar programmes are being considered by the Swiss government (which recently rejected a referendum on the proposal) and in the Netherlands where the city of Utrecht will attempt the Basic Income starting in January 2017.

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Finland is the first country to trial the Basic Income programme. Photo: Lehtikuva Lehtikuva/Reuters

 


How it works:

As a part of the programme, you, the citizen of a country, would receive an unconditional sum of money regularly from your government. This is financed either through the profits of government public institutions (such as state-owned energy companies for example), or money set aside from taxation. This money does not decrease if you earn money on top of it, in fact, you are encouraged to get a job since all that spare cash is yours as well.

This money is called a social dividend, theoretically a salary as a citizen for the production and growth you’ve created over the course of your life time, though there is a chicken and egg argument that by receiving your social dividend, you will create more production and growth, thus paying back the money you receive.

With more time on your hands, you will, theoretically, increase economic growth since you are then free to pursue higher education or a more interesting, well-paid job. This, nominally, should increase creativity, innovation and all the other buzzwords that make economists happy and allow you to finally go on that trip to Zimbabwe without re-financing your house for a second time.

Philippe Van Parijs argues that a basic income would then allow true economic freedom. Without having to spend all your time working a menial job just to provide the basic necessities for yourself or your family, the individual can pursue more creative means or that project or job that they would actually enjoy.

By simplifying all the myriad conditions and differing programmes of social welfare into this streamlined, simplified version, it is argued that this would create savings for a government and limit the amount of bureaucracy. Though, when you think about it, the cost of having to pay every single citizen a living wage perhaps outweighs the cost-savings of mothballing a few departments.

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Countries such as the United Kingdom are struggling to tackle the problem of cyclical, or, entrenched poverty. Photo: Peter Powell

Not all sunshine and rainbows

The problem with the Basic Income is that it remains mostly theoretical. While countries such as Finland and the Netherlands are taking the crucial first steps at assessing the viability of such a programme, you won’t see many countries keen on rolling it out across their entire populace any time soon. As we’ve stated earlier, the greatest barrier to a national roll out is the daunting cost to a programme that may or may not work.

Some simplified maths:

If the U.S. were to attempt to pay each of its 320 million people $500 a week, it would cost the government a staggering $160 billion a week.

Critics are keen to point out that in any form of social welfare, free-loaders will take the benefits without participating in the work force. The key question remains that if there’s no incentives attached to what is effectively “free” money, then what’s to stop even more people from ceasing to work as well?

In Switzerland, the government rejected a referendum to implement the system after popular unease at the cost as well as questions as to if people would spend the money on drugs or alcohol. In response, people called for the Basic Income to be “just live-able”, though this calls into question the effectiveness of the programme over-all.

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The idea of a Basic income holds a wide appeal, in principle, yet remains a system that needs a bit more work and evidence before it is truly implantable.

Utopians see it as a solution to the increasing automation of the workforce, Libertarians see it as an opportunity to increase personal freedom and independence, while Left leaning proponents see it as a responsibility to the poor and a tool to increase social mobility.

However, the stumbling block remains. A truly revolutionary social reform requires extreme bravery on a governments part and would undoubtedly be a gamble of public resources and finances.

We won’t be seeing any of the G20 countries leaping straight into this system in the foreseeable short-term, and even if the programme proves to be a net-positive, there will always be those who believe that in this world, we make our own luck.


 

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