It's been all over the news and some big names have endorsed the idea. A basic income that is paid out to each citizen regardless of income, education or employment. The idea in and of itself is very enticing. There are several big advantages to the idea. These include:
1. It is harder to game the system and collect more money than is your due. This is surprisingly common with other handouts. For example, fuel subsidies in many countries are disproportionately collected by the better off.
2. By the same account, there are no extra costs associated with setting up a bureau tasked with monitoring who deserves the handout and who does not. This gobbles up a huge amount of money in most countries.
3. The money is spent by people on what they need -- something that they're generally in the best positions to judge.
4. It will reduce the upheaval that we'll face as the pace of automation continues or even accelerates as people might lose their jobs but still be able to pay for their daily needs.
Nonetheless, there are a lot of people who maintain that it amounts to nothing more than a fantasy. That it's as realistic as a world without greed or conflict. So, the big question is, are they right? Is basic income a utopic dream or a possible reality?The financial question
The first problem that many people quote is that a program like this will be prohibitively expensive. It will swallow up a huge portion of a government's budget. Too much, they maintain, and this will mean that it isn't feasible.
This turns out not to be true. The idea of basic income is that it replaces other forms of financial support for citizens -- such as social welfare payments, child benefits, and retirement benefits. And in doing so, they will also dismantle a great deal of the bureaucracy that has been built up to support it. This will free up a huge amount of money, which can then be used to cover the citizens who didn't collect any benefits before the system was changed around.
Does that mean it will become financial neutral? Well, obviously that depends on how much you're going to give people and how many other benefits you are going to cut. It could be financially neutral or even end up costing the government less. Or it could end up swelling the budget.
But to dismiss the idea as unviable based on its cost is too easy.But people will stop working!
Another common refrain is that if we start giving people money for nothing, this will undermine their desire to work and will lead to a society of loafers and couch potatoes. The thing is, we already have money that we give to unemployed people in the form of unemployment benefits.
And even though these stop when people take a new job (which therefore incentivize people not to seek jobs as they lose out, studies have demonstrated irrevocably that these do not make people lazier. A basic income is even less likely to make people become lazier, as it doesn't stop when you start working again.Communist!
And then there are those who argue that we already tried something like a basic income. It was called communism and it didn't work. In truth, this is the weakest argument of the lot. Communism didn't fail because it paid people a basic income. Communism failed for two reasons:
1. Centrally planned economies are inefficient.
2. By removing the financial incentive to work they undermined innovation, appropriate assignment of resources and investment in new ventures.
Neither of these two problems holds true for a basic income. The market economy isn't suddenly rendered moot and the government isn't taking an active role in investment and goods allocation. Quite the opposite, in fact. Governments will take a step back. They will stop saying who does and doesn't deserve money and they will stop saying how that money should be spent (through food aid and educational aid, for example). This means markets should, in theory, operate more efficiently.
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