Basic income, for some a ridiculous idea, for others the thing that will eradicate poverty and a host of other problems. For those who haven’t heard of the idea yet, a basic income gives everyone a fixed sum of money every month, unconditionally. This money must be enough to cover the basic living costs such as food, basic clothing, basic housing, education and health care.
In Belgium and the Netherlands they have done a TV show about it, in Switzerland they will hold a referendum about it in 2016, in India and Namibia they have already done some very successful experiments and the number of Basic Income advocates is on the rise. Yet, most politicians are still quite far away from embracing this idea. For some of you it might be new but it has actually been around for quite some time, it just slipped of the radar in the past decades. It should be a no brainer though.
Before I dive into explaining why this is so, I’ll start with the arguments that are currently held against it.
People will have no incentive to work anymore
This is one of the most heard arguments. Funny enough, when I ask people what they would do when they receive, say 1500 Euros (or the equivalent in your currency) a month, I have yet to encounter the first person who says: I won’t do anything anymore! Yet, that is quickly followed by a statement that there will sure be a vast number of people who will just do just that: nothing.
I want to ask you that question. What would you do if you would receive the equivalent of 1500 Euros a month, starting tomorrow? Then find some people (one at least) who you think would stop doing anything and go ask them that question too. I would love to hear what you find out.
That doesn’t mean that there won’t be anyone who decides to do nothing. I am convinced that it will be a small minority though and there is research to back it up. Because we increase our happiness by working … on something we choose ourselves, something that is meaningful to us. There’s a good chance it’s not the job you’re doing right now, especially if your main motivation for that job is the salary. Which by the way does not contribute to happiness.
And those who decide to just live on their basic income? They do not consume a lot and thus will have a small ecological footprint. Maybe they will grow their own food even (that’s work by the way), or make their own clothes (work again) or be stay at home dads and mums (yup, work).
There are necessary jobs that no one will want to do anymore
One of the first I usually hear when this comes up is: who will be willing to collect the garbage when they have a basic income?
The context in which this question is asked is usually one that assumes the people doing that job will still be working full time and are being payed what they are being payed today. That’s not necessarily the case though. Collecting garbage is definitely one of the jobs that is necessary for our society. Just think back on one of the garbage collectors’ strikes in New York and you’ll know why. And since this job is so valuable for us, maybe we should pay the people doing it accordingly.
It’s quite a novel idea in our society where we tend to pay the bankers who are responsible for our economic crises more than the people who actually contribute to our society, like garbage collectors and teachers. I do believe we should seriously consider it though.
And when collecting garbage all of a sudden starts paying really well I’m sure there would be quite some people who would be willing to do it in order to make some extra cash. Maybe not full time but what about a couple of days a month?
Which brings me to the second part of the assumption, that it has to be a full time job. Collecting garbage does not require a high degree of education so basically anyone would be able to do it. It also does not have lengthy projects or dedicated customer relationships where transfer of knowledge would pose a problem. No one cares that their garbage is picked up by someone else every day/week, as long as the work gets done. So a lot of people could all be doing a little bit of garbage collecting and together we get the job done. It could even be a welcome break from a high intensity job. You can relax your brain, get out, explore your neighbourhood and get some exercise.
It is too expensive
Another favourite, especially for those who do not want to go through the effort of actually doing the math. Of course we can not just say: here is the equivalent of 1500 Euros for everyone and not change anything else. Every country will have to look at their financial and tax structure to see how they can fit it in. It might not be the easiest task but if you look at how most countries managed to come up with incredibly complex tax systems, supplemented by an army of programs for unemployment, health care, child care and a slew of others, they should be able to work it out.
There are some obvious savings that go along with introducing a basic income though, the low hanging fruit.
- No more unemployment programs. Because everyone gets a basic income there is no need for this. Also, all the institutions that exist to check whether you are entitled to get money from an unemployment program also seize to exist.
- No more state pension plans. Same reasoning as the unemployment program. This also eliminates the entire administration that goes with it.
- No more child care programs. With this I mean the money you get when you have a child. This can simply be replaced by making the basic income age related for kids. Say half of an adult income up to a certain age or maybe it’s even possible to give children the same amount as adults. The experiment in India gave kids half of what adults had up to the age of 14, after that they got the full amount.
These 3 things would already save quite a bit of money for the government.
Apart from that there should be a restructuring of the tax system. Most countries currently get a large portion of their taxes from tax on labour. That is a hugely inefficient system though. A study in Europe found that in order for the government to collect a net income of 1 Euro from tax on labour, they need to collect 1.9 Euros of taxes. That means that the tax collection system itself eats up 47% of the collected taxes! Now here’s an area where a lot of money could be saved. When that same Euro would have to come from tax on energy consumption, only 1.08 Euro needs to be collected. That means that the 1.9 Euros that is now collected through tax on labour would give the government 1.76 Euros of net income, a whopping 76% increase in net income gain!
Apart from taxing energy consumption, what are the alternatives? Shifting taxes away from taxes on labour to taxes on consumption, pollution, land use, rent and capital gain could be a good alternative. Getting rid of recuperation of VAT on finished products by companies would save quite a bit too. The Ex’Tax group in the Netherlands is promoting a similar thing. And it would have some psychological benefits. When taxes are shifted mostly to consumption we would have a greater sense of control over our income from labour. Right now, when we earn money from hard work, we see the government come in and just take a sometimes huge chunk out of it. Imagine you get to keep it all. You would still pay taxes every time you buy something but at least it would be under your control. And an increased sense of control satisfies a deep need in us, which will result in a happier life.
On top of the savings it would also increase job market flexibility. Imagine there is no tax on income from labour. That means that, if you, for example, need an extra hand in the bar because it’s really busy one night, you can simply ask one of your customers to help you out for a couple of hours. You have instant help, the customer earns an extra buck.
The other advantage is that labour would become cheaper and more affordable for everyone. This could result in a shift to a service consuming society instead of our current product consuming society. That would have large environmental benefits. And, as research suggests, create happier people.
We could also start producing goods that last longer and come with a service contract since it would be economically more viable than it is now. That way we can get rid of planned obsolescence, which is detrimental for our environment.
And apart from all that, it is necessary
The reason why a basic income, or at least something similar to it, is not just an interesting idea but actually a necessity is due to a new technological revolution that is looming on the horizon. And that horizon is closer than you might think.
Machines are getting smarter and they will soon be able to take over most of the jobs we have in the Western world. Robots are getting more versatile too, increasing the number of jobs we might loose to the machines. And I am not talking some fringe jobs here, I’m talking every job in the data manipulation and transport sectors. That garbage collector will soon be replaceable by a smart robot, help desk jobs taken over by computers. Even accountants, lawyers and bankers will be replaceable by smart machines that vastly outperform humans in their domain. And there will be no end as to what becomes possible further down the lane.
That means we are looking at massive unemployment in the not so distant future. And when I say massive, think upwards of 60%. And that is a conservative number. That means that if we keep coupling earning a living wage to payed work, most of us will not be able to survive.
This is avoidable with a basic income though. We can create a world where not only everyone has enough money to assure their basic needs are met, we can create a world where we all have the time to spend most of our lives building meaningful relationships and doing meaningful work. Both of which will make us happier people. Now, if that is not something that is worth creating then I don’t know what is.
Also published on Medium.