Why Basic Income?

While social welfare systems all over the world seem to reach their limits it appears that it may be time to find answers and solutions to these challenges. The need to bring on the way systemic changes in fiscal and social policies that satisfy the needs of people – not least in view of the impact of globalization – appears obvious. Most welfare systems are criticized for their counterproductive effects on the labour market which is connected with the regulations for additional earnings. Recipients of social benefits involved in working activities are confronted with a possible reduction in the amounts of transfers and as a consequence, any further work performed in addition to the social benefits does not necessarily increase the amount of final income and thus creates a disincentive to take up employment and leads to reduced labour supply (Gilroy, et al., 2013).

Baker and Ryan (2016) argue that BI would provide an incentive for unemployed people to seek employment, since any income from a paid job would always exceed the level of income while being on the dole. Therefore BI could eliminate the poverty trap by guaranteeing that no one would be financially better off unemployed. Part-time employees and people on short-term contracts would no longer have to worry about receiving no income during periods of unemployment. They also elaborate further that basic income would provide the necessary security to support innovation and create new markets for employers, self-employed people and start-up entrepreneurs. BI could reduce costs and bureaucracy and it also may support flexible working arrangements and consequently could provide a better work-life balance. There are a multitude of arguments in favour of the BI.

BI would support full-time and part-time study, enhance people’s skills and increase productivity. Baker and Ryan (2016) also argue that BI would provide support for carers, whose work is fundamental in every economic system. Basic income would also provide support for artists, volunteers, activists and social innovators, whose work is often seen as undervalued by labour markets, and would eliminate the administrative and human costs of the present social welfare system. They argue that BI would give every person, during different stages of their life, more freedom to choose how much time, they devote to paid employment and other activities, rather than being restricted by the crucial need to earn a livelihood.

There may be many reasons to advocate BI. Proponents (L'Hirondelle & Larochelle, 2004) argue that it may eliminate poverty and social inequality, re-define work and increase productivity, it could be a milestone on the way to mankind’s freedom and it may improve democracy and some even call it the next logical step in capitalism (Benns, 2016). The arguments in favour are almost countless. The American Institute for Policy Studies (Anderson, 2014) reported that:

"Every extra dollar going into the pockets of low-wage workers, standard economic multiplier models tell us, adds about $1.21 to the national economy. Every extra dollar going into the pockets of a high-income American, by contrast, only adds about 39 cents to the GDP."

Although the exact cost of a country’s national basic income scheme, of course, would depend on the level of payment but however, the introduction of an unconditional BI would allow a serious streamlining of the state’s administrative apparatus since all previously paid public assistance benefits would be merged into the unconditional BI. The administrative burden on both the state’s side as well as on the taxpayers’ side could be significantly reduced. The state would thus become significantly more efficient, and the resources thus obtained could be fed to more productive uses.

It appears that BI in Europe is just around the corner and the author is of the firm conviction that our society is facing a major transformation and therefore huge challenges in the near future. The primary challenge for the future labour market may not be to predict an implicitly as deterministic predetermined future as closely as possible, but rather to create the future according to our society’s own values.

Anderson, Sarah, 2014. Wall Street Bonuses and the Minimum Wage. [Online]

Available at: http://www.ips-dc.org/wall_street_bonuses_and_the_minimum_wage/ [Accessed 03 05 2016].

Baker, J. & Ryan, A.B., 2016. What is a basic income and how could it benefit Family Carers ?. [Online]

Available at: https://ucd.academia.edu/JohnBaker [Accessed 06 08 2016].

Benns, Roderick, 2016. Moving to an entrepreneurial society with basic income improves capitalism. [Online]

Available at: http://leadersandlegacies.com/2016/03/21/moving-to-an-entrepreneurial-society-with-basic-income-improves-capitalism/ [Accessed 03 05 2016].

Gilroy, Bernard M., Heimann, Anastasia & Schopf, Mark, 2013. Basic Income and Labour Supply: The German Case. Basic Income Studies, 8 (1), pp. 43-70.

L'Hirondelle, C. & Larochelle, J., 2004. 10 reasons why we need a Guaranteed Livable Income. [Online]

Available at: http://www.livableincome.org/whyagli.htm [Accessed 21 01 2016].