Basic Thoughts on Basic Income’s Future

The feasibility of a national basic income model has become a hot conversation topic over the last couple of weeks, spurred by Switzerland’s upcoming public referendum on the implementation of a basic income guarantee for its citizens. In a basic income model, the government provides each of its voting-age citizens a monthly or annual stipend to replace the various social welfare payments the government normally distributes. The goal is to effectively eliminate poverty by ensuring that everyone has a minimum income for self-sufficiency while also creating a more efficient centralized payment system.

No widespread adoption of this model has occurred in the past, though a host of small towns and districts from around the world have enacted basic income guarantees with generally successful results. As Annie Lowrey mentions in her report on Switzerland’s ballot, beyond ridding these “test” communities of poverty, guaranteed income also spurred positive externalities such as higher education levels and lower hospitalization rates.

Of course, local-level implementation of the basic income model differs greatly from any sort of theoretical national implementation, especially in the United States. Many economists are skeptical or outright pessimistic about its efficacy and feasibility. Questions about currency inflation and monetary devaluation are inherent, as is the fear that this kind of lump-sum payment will either disincentivize people from working or lead to adverse spending on things that won’t actually reduce poverty. On the budget side, Danny Vinick calculates that it would cost $2.14 trillion to provide a poverty-line level of basic income to all American adults between the ages of 21 and 65. Even when the costs of programs rendered unnecessary by a basic income policy are credited to that total (such as food stamps and earned income tax credits), we would still be short about $1.2 trillion annually.

Although basic income may not be a viable policy proposal at present, it wouldn’t surprise me if it becomes an increasingly popular idea over the next few decades. I say this for two overarching reasons:

1) It appeals to both conservatives and liberals.

Well… sort of. For the most part, basic income appeals to libertarians and quasi-socialists who are operating on wildly different premises. Charles Murray, one of the faces of the libertarian basic income movement, argues that it’s a more efficient mechanism for disbursing government funding since it aggregates all social welfare payments into one check per individual. He believes it’s an avenue to make the market more efficient and less bureaucratic. On the left, scholar Philippe Van Parijs, who has published extensively on basic income, argues that it’s a means to achieve “true freedom” and one of the only mechanisms that justifies capitalism.

Despite these disparate philosophical positions on basic income, it’s promising to think that a common ground exists, especially one which solves the harms that both men identify. Not only do we realize greater economic freedom and poverty alleviation, but it’s done in such a way that makes American capitalism theoretically more efficient and reduces the role of government in managing a host of welfare programs. There should certainly be skepticism whether either of these outcomes could actually be achieved, but it’s heartening to imagine that we could find a relatively broad consensus on an issue that would nominally seem so divisive.

Actually seeing these ideas trickle down to a viable political level is no guarantee, especially since they’re coming from each party’s outer orbit. But I think this will become a more mainstream issue in the future because…

2) A permanently post-manufacturing society has to support its population somehow. This might be a way.

Much has been said about America’s loss of manufacturing jobs over the last 3-4 decades. Despite recurring reports about the small-scale American manufacturing revitalization, it’s unlikely that most of these jobs are coming back. Ideas- and service-based industries are already central to our economy and will likely become even greater components of U.S. GDP in the future.

Coupled with the likelihood of increased automation in service and production lines (including machines building and creating new machines), there will be fewer and fewer lower-skilled jobs in the future. A premium will be placed on people with ideas to create new things, but there will likely be fewer and fewer positions for people to actually make those things.

How will low-skilled people, who will probably make up a sizable proportion of eligible workers, be able to earn a living in this scenario? Perhaps this is where basic income could come in. The primary critique economists cite against basic income is that it disincentivizes people from working, but if there simply aren’t enough jobs to go around, then this disincentive becomes a potentially helpful mechanism to temper a swelling labor supply.

In this scenario, basic income serves as a mediating factor to ensure that all citizens are at least provided a minimum level of security and livelihood. It functions as a security hedge, too- unrest is always higher when people can’t work and can’t eat. The result is a new kind of social structure in which people can opt not to look for work and still have basic securities (food, clothing) or to look for a job and work to move beyond this minimum. Everyone has the basics but those who want to pursue further profit can do so.

This is a gross simplification of what would be a very complex situation, of course, and it doesn’t address the problems identified earlier that exist today. It’s unlikely we’re going to have an extra $1.2 trillion (2013 dollars) each year lying around in 2090 to spend on something like this. But I’d imagine the proposition of basic income will become more and more prominent as the years go by and we have to start confronting what a decidedly post-manufacturing society will look like. Given the potential for overlapping interest from the left and the right, basic income experiments in small towns might become more and more common as a means to test national feasibility.

I’m hoping Switzerland’s referendum passes. It’ll be fascinating to see whether this can work on a larger scale.

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One thought on “Basic Thoughts on Basic Income’s Future

  1. Pingback: Why You Should Do What You Love | SoshiTech

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