23/3/2014

Basic Income

The Hawkins brothers on what is Basic Income and its benefits.

What is Basic Income?

Basic income is providing every citizen regular, flat cash payments unconditionally.  In other words, if you can prove you are a citizen, you get a regular paycheck.

What are the definite benefits of Basic Income?

  • It is the most efficient possible form of wealth redistribution because there is no bureaucratic overhead needed.  More money reaches the poor directly.
  • It is more equitable than retirement plans, which transfer wealth from young to old.
  • It enables people to work on only what they want to.
  • It improves opportunities for individuals to use their Basic Income to get an education, start businesses, or make investments.
  • The amount of Basic Income could rise over time with productivity & automation growth.NewImageNewImage
  • It would enable resources spent on the current bureaucracy to work on other tasks beneficial to society.
  • It reduces the marginal tax rate for the poor, creating better incentives.  Currently, the poorest receive a combination of unemployment, food stamps, and other government subsidies, which often go away if they take a job.  Each of these issues create in effect high marginal tax rates.  In extreme situations, it means people can go back to work and make less money than before.  With basic income, there is more incentive to work, as everything you make is additive.
  • It should replace unemployment, which is pay to not work, which creates a perverse incentive.
  • It should replace minimum wages, which incentive employers to reduce jobs.
  • It reduces political corruption.  There are fewer government bureaucrats and fewer spending levers to grant political favored groups favorable treatment.

What are probable benefits of Basic Income?

  • It would provide a more stable consumer purchasing base, stabilizing the economy.
  • It would reduce crime as a result of lower levels of desperation, particularly among the youth.

In the HackerNews discussion, I found this article by Rutger Berman, who goes into experiments of basic income across the world. Lots more to learn and understand. But this is fascinating.

London, May 2009. Read the Dutch version here / Lees de Nederlandse versie van dit artikel hier. A small experiment involving thirteen homeless men takes off. They are street veterans. Some of them have been sleeping on the cold tiles of The Square Mile, the financial center of the world, for more than forty years. Their presence is far from cheap. Police, legal services, healthcare: the thirteen cost taxpayers hundreds of thousands of pounds. Every year.

That spring, a local charity takes a radical decision. The street veterans are to become the beneficiaries of an innovative social experiment. No more food stamps, food kitchen dinners or sporadic shelter stays for them. The men will get a drastic bailout, financed by taxpayers. They’ll each receive 3,000 pounds, cash, with no strings attached. The men are free to decide what to spend it on; counseling services are completely optional. No requirements, no hard questions. The only question they have to answer is: What do you think is good for you?

[…]

A year after the experiment had started, eleven out of thirteen had a roof above their heads. They accepted accommodation, enrolled in education, learnt how to cook, got treatment for drug use, visited their families and made plans for the future. I loved the cold weather,’ one of them remembers. Now I hate it.’ After decades of authorities’ fruitless pushing, pulling, fines and persecution, eleven notorious vagrants finally moved off the streets.  The Joseph Rowntree Foundation did a study of this experiment.

Costs? 50,000 pounds a year, including the wages of the aid workers. In addition to giving eleven individuals another shot at life, the project had saved money by a factor of at least 7. Even The Economist concluded:

The most efficient way to spend money on the homeless might be to give it to them.’

Poverty is fundamentally about a lack of cash. It’s not about stupidity,’ author Joseph Hanlon remarks. You can’t pull yourself up by your bootstraps if you have no boots.’

An idea whose time has come.

The idea has been propagated by some of history’s greatest minds. Thomas More dreamt of it in his famous Utopia (1516). Countless economists and philosophers, many of them Nobel laureates, would follow suit. Proponents cannot be pinned down on the political spectrum: it appeals to both left- and right-wing thinkers. Even the founders of neoliberalism, Friedrich Hayek and Milton Friedman supported the idea. Article 25 of the Universal Declaration of Human Rights (1948) directly refers to it.

The basic income.

And not just for a few years, in developing countries only, or merely for the poor — but free money as a basic human right for everyone. The philosopher Philippe van Parijs has called it the capitalist road to communism.’ A monthly allowance, enough to live off, without any outside control on whether you spend it well or whether you even deserve it. No jungle of extra charges, benefits, rebates - all of which cost tons to implement. At most with some extras for the elderly, unemployed and disabled.

The basic income - it is an idea whose time has come.


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