THe Blog

June 17, 2016

Universal Basic Incomes

This Economist article explains why "'universal basic income', an unconditional government payment given to all citizens, as a supplement to or replacement for wages" is basically flawed.

 

"Since 2000 economic growth across the rich world has failed to generate decent pay increases for most workers. Now there is growing fear of a more fundamental threat to the world of work: the possibility that new technologies, from machine learning to driverless cars, will cause havoc to employment...

 

If the need for a basic income is unproven, the costs are certain. Its universality is designed to encourage citizens to think of the payment as a basic right. However, universality also means that the policy would be fantastically costly...

 

Such a big jump in the size of the state should make anyone wary. Even if levied efficiently, on an immovable asset like land, tax rises on this scale would have unpredictable effects on growth and wealth creation...

 

A universal basic income would also destroy the conditionality on which modern welfare states are built... over time, the stigma against leaving the workforce would surely erode: large segments of society could drift into an alienated idleness. Tensions between those who continue to work and pay taxes and those opting out weaken the current system; under a basic income, they could rip the welfare state apart...

 

Lastly, a basic income would make it almost impossible for countries to have open borders. The right to an income would encourage rich-world governments either to shut the doors to immigrants, or to create second-class citizenries without access to state support...

 

...rather than upend society with radical welfare reforms premised on a job-killing technological revolution that has not yet happened, governments should make better use of the tools they already have...

 

A universal basic income might just make sense in a world of technological upheaval. But before governments begin planning for a world without work, they should strive to make today’s system function better."

 

Read the full article here

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