EUROPEAN PAPERS ON THE NEW WELFARE

Abstracts from The Employment Dilemma and the Future of Work

7. The need of a basic income

7.1 The minimum guaranteed income

We have already emphasised the importance, for a modern economy, to include in the strategy for developing the wealth of nations non-monetarised and non-monetised activities and work. It is, however, important to avoid any misunderstanding on the value and social importance of money. There is no question of going back to the old utopias of the last centuries or to new ones, dreaming of a money-less society. Money has been one of the essential creations of civilisation for making real progress possible. Of course the human shortcomings are such that money, like religions or medical drugs, instead of being used only for the good, can be and are sometimes misused for the evil. But it should also be clear that the old utopias for a money-less society of the past were in fact subconscious tentatives to escape modern realities and possibilities in their positive sense, and reflect simply resistance to new possible amelioration. A Robinson Crusoe type of society whatever the myth and particularly in a situation of massive human interdependence, is impracticable and most likely leads to disaster.
Since our current economic system is based to a large extent on the use of money and we do not aim for a change in this, it is essential that everybody has access to a certain amount of money to pay for the necessities of life. These include adequate nutrition, clothing, housing, health care etc. Unfortunately, for 1.4 billion people, approximately one fourth of the world population, even these necessities of life seem out of reach since they subsist below the poverty level as determined by the United Nations in 1995.
Therefore, any sort of employment policy, keeping in mind the necessity of developing productive types of jobs, must aim at the minimum essential availability and access to money. It is a first step to personal freedom. By private and — when necessary — by public means everybody should have access to a necessary minimum amount of money for a productive work. It has been suggested that one possible alternative to provide this minimum amount of money is very simple: a universal, unconditional basic income paid by the state to each individual citizen. A basic income would provide each individual with a form of material independence never previously enjoyed in the Industrial Revolution, except perhaps by large property holders. Women would no longer depend on men for subsistence, nor workers on employers for wages, nor the unemployed on a state office for their social benefits. The shock that nowadays follows any radical change in a family’s situation, such as the bread-winner dying or becoming unemployed, would be cushioned.
A basic universal income would possibly unify and simplify the current immensely complex tax and benefits system. At present, the state often distributes more in tax allowance than in social security benefits, but few people understand or recognise this. Under the basic income scheme, all income from all sources would be taxed, and everyone would pay according to their age and health. The basic income scheme would thus abolish the poverty trap, under which at present many low earners often lose income benefits of various forms, as well as the unemployment trap, which makes it unprofitable for people to return to work, when the moral hazards effects are not taken adequately into consideration.
Above all, a basic universal income would encourage risk-taking and innovation by individuals. Absolute poverty is an inhibitor to the risk-taking and activity creation that constitute the main chance for women, the young and the elderly to gain access to wealth creation, through productive or unproductive activities, in terms of monetarised material wealth or non-monetarised activities. Education and training can be integrated with employment so as to reflect an individual’s choice and not merely the needs of the employer. Work motivation would then tend to replace financial interest as the main criterion for job selection. Technological change would be easier, as workers would have fewer reasons for protecting jobs, since their basic incomes and personal dignity would be guaranteed through the basic income scheme.
Arguments against the basic income scheme focus mainly on costs and work incentives. Some experts have worked out revenue-neutral schemes using current figures, keeping basic incomes near the present supplementary benefit levels and taking account of tax relief and income-tax allowances. Some people would certainly change from formal employment to self-employment or self-servicing activities, for example, taking the optimisation of the utilization period of the goods around them into their own hands, rather than relying on expensive expert services. This possible increase in the ‘informal’ economy would still increase overall wealth as measured in assets and system operation, even if it did not qualify as an increase according to the Industrial Revolution’s criterion which measures only paid employment resulting in products that are sold. Socially useful non-monetarised activities would equally be encouraged by a basic income scheme, such as looking after one’s own parents rather than locking them up in other people’s homes. Various forms of cooperative would become possible, and could be established by workers pooling their basic incomes for the time it takes for a venture to become commercially viable.
The debate on basic incomes has started and has already produced various formulae, for example, Milton Friedman’s idea of ‘negative income tax’. In fact, the proliferation of many sorts of benefits, insurance schemes and allowances makes the prospect of a basic income increasingly likely, a process that will be accelerated over time by two major areas of concern: first, the need to co-ordinate what already exists, and second the challenge of giving incentive to a risk-prone society while meeting its minimum survival needs and avoiding the negative incentives and moral hazards engendered by the speculative behaviour of individuals whose sole purpose is to accumulate priviledges from as many sources as possible.


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