Basic Income

basic income europe

An unconditional basic income (also called basic income, basic income guarantee, universal basic income, universal demogrant, or citizen’s income) is a proposed system of social security in which all citizens or residents of a country regularly receive an unconditional sum of money, either from a government or some other public institution, in addition to any income received from elsewhere.

A basic income is typically intended to be only enough for a person to survive on, so as to encourage people to engage in economic activity. A basic income of any amount less than the social minimum is sometimes referred to as a ‘partial basic income.’ On the other hand, it should be high enough so as to facilitate any socially useful activity someone could not afford to engage in if dependent on working for money to earn a living.

Basic income systems financed on returns to publicly owned enterprises are major components in many proposals for market socialism. Basic income schemes have also been promoted within the context of capitalist systems, which would be financed through taxation or a negative income tax (where people earning below a certain amount receive supplemental pay from the government instead of paying taxes to).

Similar proposals for ‘capital grants provided at the age of majority’ date to Thomas Paine’s ‘Agrarian Justice’ of 1795, there paired with asset-based egalitarianism. The phrase ‘social dividend’ was commonly used as a synonym for basic income in the English-speaking world before 1986.

One claimed advantage of basic income is that it removes existing disincentives to work. Where basic income is not present in some case, people on benefits who begin work lose benefits at around the same rate that their income rises (a form of poverty trap where the marginal tax rate is 100%). With basic income this does not happen-the rate of increase is positive at all incomes.

A frequent objection to basic income is the lack of reciprocity, since the basic income is unconditional. Thus one critical view theorizes that it would have a negative effect on work incentive and labor supply. It might be expected that the degree of the disincentive would depend on how generous the basic income were to be. Many basic incomes are proposed to be set at a level that would only just be liveable, so that people would want to supplement it.

In one study, even when the benefits are not permanent, the hours worked—by the recipients of the benefit—are observed to decline by 5%, a decrease of 2 hours in a typical 40 hour work week: ‘While experiments have been conducted in the United States and Canada, those participating knew that their benefits were not permanent and, consequently, they were not likely to change their behavior as much or in the same manner had the GAI been ongoing. As a result, total hours worked fell by about five percent on average. The work reduction was largest for second earners in two-earner households and weakest for the main earner. Further, the negative work effect was higher the more generous the benefit level.’

However, in studies in rural Manitoba, the only two groups who worked less in a significant way were new mothers, and teenagers working to support their families. New mothers spent this time with their infant children, and working teenagers put significant additional time into their schooling. Under Mincome, ‘the reduction of work effort was modest: about one per cent for men, three per cent for wives, and five per cent for unmarried women.’ Another study that contradicted such decline in work incentive was the Namibian pilot project implemented in 2008 and 2009 in the village of Omitara; the assessment of the project after its conclusion found that economic activity actually increased, particularly through the launch of small businesses, and reinforcement of the local market by increasing households’ buying power.

The Basic Income Earth Network (BIEN), an international advocacy group based out of Belgium, describes one of the benefits of a basic income as having a lower overall cost than that of the current means-tested social welfare benefits, and they have put forth proposals for implementation they claim to be financially viable. Affordability of a basic income proposal is a function of the social/government services it replaces, any tax increases, and the less tangible positive effects on spending and tax receipts associated with wealth redistribution towards the poor, and any social savings as a result of less crime, or fewer incarcerable offenses.

Basic income and traditional welfare systems both share goals of achieving some level of economic equity. The concept of a ‘Guaranteed Minimum Income’ typically operates by ‘topping up’ deficient wages – which itself typically relies on the assumption of some level of participation in the labor force – whereas basic income is paid to all irrespective of income or other eligibility criteria.

In many countries, there are advocates for a basic income. Several have proposed a negative income tax, which is means tested, rather than a basic income. Despite their differences in administration and effect, the two proposals are usually conflated. One of the world’s most outspoken advocates of a basic income system is Belgian philosopher and political economist Philippe van Parijs. Others include German drugstore magnate Götz Werner, Dutch political activist Saar Boerlage, French social theorist André Gorz, American political philosopher Michael Hardt and Italian Marxist sociologist Antonio Negri, American libertarian political scientist Charles Murray, New Zealand economist Gareth Morgan, Finnish politician Osmo Soininvaara, University of London economist Guy Standing, and Brazilian politician and economist Eduardo Suplicy.

In his final book ‘Full employment regained?’ British economist and Nobel Laureate James Meade states that a return to full employment can only be achieved if, among other things, workers offer their services at a low enough price that the required wage for unskilled labor would be too low to generate a socially desirable distribution of income. Meade concludes that a citizen’s income is thus necessary to achieve full employment without suffering stagnant or negative growth in wages. He advocated for a social dividend scheme to be funded by publicly owned productive assets.

In 1918, philosopher Bertrand Russell argued for a basic income in ‘Proposed Roads to Freedom’ as a means to decrease the average working day and full employment. Sociologist and democratic socialist Frances Fox Piven argues that an income guarantee would benefit all workers by liberating them from the anxiety that results from the ‘tyranny of wage slavery’ and provide opportunities for people to pursue different occupations and develop untapped potentials for creativity. Andre Gorz advocated a basic income system as a means to overcome alienation and as an adaptation to increasing automation of work, which would lead to an improve on the amount of leisure time available to individuals through a re-distribution of the workload in society.

Geolibertarians seek to synthesize propertarian libertarianism and a geoist (or Georgist) philosophy of land as commonly and equally owned by all people, citing the classical distinction between unimproved land and private property. The rental value of land is produced by the labors of the community and, as such, rightly belongs to the community at large and not solely to the landholder. A land value tax (LVT) is levied as an annual fee for exclusive access to a section of earth, which is collected and redistributed to the community either through public goods, such as public security or a court system, or in the form of a basic guaranteed income called a citizen’s dividend. Geolibertarians view the LVT as a single tax to replace all other methods of taxation, which are deemed unjust violations of the non-aggression principle.

Basic income has also been promoted by people associated with political views that are generally opposed to the public provision of welfare services, such as right-libertarianism, economic liberalism, and anarcho-capitalism. These people support basic income as a strategy to reduce the amount of bureaucratic administration that is prevalent in many contemporary welfare systems, as well as acting as a form of compensation for fiat currency inflation. Notable libertarian-capitalist proponents of basic income include Milton Friedman (in the form of negative income tax), Gary Johnson (In the form of the fair tax ‘prebate’) and Charles Murray.

It is clear, however, that Friedrich Hayek did not advocate that any modern nation act to implement a minimum income. This was a concept that he attributed to his ‘Great Society,’ which was his Utopian liberal society, in the classical sense. Hayek emphasized a minimum income in the far future, and stated clearly that no wealthy countries such as the United States should guarantee any income not available to all around the world because: ‘It is obvious that for a long time to come it will be wholly impossible to secure an adequate and uniform minimum standard for all human beings everywhere, or at least that the wealthier countries would not be content to secure for their citizens no higher standards than can be secured for all men. But to confine to the citizens of particular countries provisions for a minimum standard higher than that universally applied makes it a privilege and necessitates certain limitations on the free movement of men across frontiers… we must face the fact that we here encounter a limit to the universal application of those liberal principles of policy which the existing facts of the present world make unavoidable.’

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