154. A basic income
For
democracy and capitalism to survive, in addition to a change of perspective on
equality and solidarity, discussed in the preceding items in this blog, a
corresponding system change of the economy is needed, in the distribution of work,
income and wealth. For that I recommend the introduction of a basic income
(BI).
A BI is a
free, unconditional, fixed subsistence income for everyone above a certain age. I propose
something like this: 1000 euros per month in a developed country such as the
Netherlands. On additional income there is a tax, at a flat rate of 20 to 30 %,
except for very high levels of profit income for which a rate would apply of 50
to 60%. I claim that the step to a BI is
inevitable, sooner or later. Here are my arguments.
Work has
been shrinking for a long time, as a result of increasing productivity (reduced
cost per unit of production), mostly due to technology and innovation. First in
agriculture and then in industry. Until recently it was thought that employment
would be maintained in services, where productivity growth was supposed to be
small.
However,
innovation, especially in information and communication technology, such as the
internet, have increased productivity and reduced employment in a whole range
of services, especially those involved in the processing of information, such
as administration and communication, e.g. in banking, insurance, booking,
publishing, media, parts of entertainment, surveillance, security, retailing
and physical distribution, etc.
This has produced
a polarization of work and income, between highly paid professional and
managerial jobs and low-paid, unskilled work, such as cleaning, serving (cafes
and restaurants), call centres, harvesting, parts of construction, and parts of
care. Especially the middle classes have suffered from this, which contributes
to widespread discontent.
A next wave
is that of robots, replacing labour in harvesting, driving (automated cars,
trucks and airplanes), cleaning, forms of care and nursing, which will eliminate
much of the work indicated above.
We should
be happy about this reduction of dirty, exhausting, dangerous and boring work.
We are in fact unhappy because it threatens employment and income. How much
work will be left, how much employment, and what source of income? The BI
offers a solution.
Forms of
work that will remain are: all forms of culture, entertainment, teaching, forms
of care that entail human interaction, social activities (community work, help
of elderly and handicapped), day care for children, etc. Ironically, those
activities of the future are the ones that are currently curtailed to reduce
government spending.
How would a
basic income help? One major benefit of it is that it eliminates the ‘poverty
trap’. Currently, receivers of social benefits (for unemployment, rent, health
insurance,…) lose their benefits when they enter employment. It is as if on
wage income they pay 100% tax. This keeps them locked into poverty. With a BI
they would pay tax on additional income, but only 20-30%.
This gives
an incentive to perform the social and cultural services that remain to be
done, and do it at a low wage, on top of basic income, which makes those
services more affordable. There would no longer need to be a minimum wage.
In addition
to that, there would be an incentive for enterprising people to voluntarily
leave traditional jobs to become self-employed, since they can fall back on the
minimum of the BI when the enterprise fails. Also, the BI would sustain them
through the difficult period of developing and introducing innovations, under
an uncertainty that discourages suppliers of capital.
I suggest
that an impulse of enterprising self-employment is good for the economy,
society and culture. Also, it makes room for people who have no aptitude or
drive for self-employment, want jobs but can’t get them.
From what
would a basic income be paid? A number of existing social benefits could be
abolished. It would be financed from tax on wage incomes above the BI, and on a
high tax on profit income from capital. An immediate objection would be that
this would drive investment abroad, thus eliminating that tax base. But wait.
The robots to be used are location bound, in harvesting, cleaning,
transportation, care, etc. To earn profit from them one would have to pay the
local taxes on them. Robots do not earn an income for work but pay for it. They
are the slaves of the future.
Finally an
ideological argument. Entrepreneurs and firms claim that they are the ones who
add value and deserve the reward for it. But what they add value to is the
fruit of many generations of genius, sweat, blood and tears. Why should they
have an exclusive claim on its fruits? The BI is to be seen as the fruit
(called ‘social dividend’ in the literature) of that common heritage, with
equal rights to all.
The advent
of robots makes the time ripe for a BI.