How Basic Income might change things

I mentioned in my last post that I’ve been thinking a lot about the idea of a guaranteed basic income (http://en.wikipedia.org/wiki/Basic_income) as a way to address a number of challenges that western societies are increasingly facing.

In short, the idea proposes that a guaranteed basic income would be paid to each citizen, irrespective of work status, replacing benefits that are costly to administer and alienate a growing proportion of the population.

In this post, I’d like to ponder how people’s lives might be different if we all received such a basic income, set at around the level of what is commonly called a living wage (http://en.wikipedia.org/wiki/Living_wage).   I would ask that readers read it as one person’s sincere thoughts, rather than a rigorous or conclusive argument.

I haven’t come across a better system than the market for determining what work people do.  But markets only work when both sides have some bargaining power.  Society’s natural response to the lack of bargaining power is to introduce regulation, and I do believe we’re in an overall better state than we’d be in if we had no regulations.  But regulations have a cost.  I get nervous when governments assigning work to people, or forcing companies to hire people or pay them particular salaries, as I don’t think they can properly take into account individual cases, and changing times.  I believe that by improving the bargaining power of individuals, a guaranteed basic income would improve the effectiveness of the market, with less need for regulations.

A common argument against a guaranteed basic income is that people would then have no reason to work. I don’t see this. Productive work is rarely the result of desperation. Instead, I would expect people who could survive without jobs to still be motivated to contribute, based on the natural human desire for significance.  This can be seen in that most people who know their parents wouldn’t let them starve still want to work.

The way in which people contribute would change, but I believe for the better. No one would be forced into any job, rather they would decide based on the income to be earned and satisfaction to be gained, versus the time and hardship endured.  I would expect to see more people choosing pastimes that they found intrinsically fulfilling as well as financially rewarding.  I’d expect to see less craving for the security of a traditional job in a big company, and more creativity and innovation.

I am sometimes asked, “What about garbage collectors and call centre workers?”.  I recognise that there are jobs out there that depend on desperation for many applicants (though would caution against generalising all such employees as desperate).  My expectation is that a basic income would lead to several simultaneous effects: employers would need to improve pay and the conditions of these jobs, making them more worth having, technology would reduce the need for these workers (and make them more productive), so we’d end up with a new equilibrium, which I’d deem better.

Finally, I worry about resentment in society.  Those that receive benefits may resent the obligations that come with it, not to mention the social stigma.  And those who don’t receive benefits may resent those that don’t.  This divides the community, and perceived unfairness reduces the tendency to work together for everyone’s benefit.  I would hope that a guaranteed basic income would go some way to reducing the resentment and feeling of unfairness.

4 thoughts on “How Basic Income might change things

  1. John Stepper

    I am loving this series of posts. Thank you. One of the ideas that has a lot of support in the US (but no action yet) is raising the minimum wage by 20% or more (from $7.25 to $9.00 or even $10.10). What do you think of that?

    Reply
    1. Guy Lipman

      The question of a minimum wage is a difficult one. It takes away freedom from employers and employees (and I’m not sure a one-size-fits-all law ensures people are treated fairly), but I can see that that freedom is currently being abused by many employers.

      That is part of the relative appeal to me of a basic income – it gives workers the ability to bargain fairly, and then gives back to individuals and employers the freedom to make the decisions that suit them.

      In the absence of a guaranteed basic income, I’d have to support the raising of the minimum wage towards the living wage: I believe the improvement in job quality, productivity and life for the minimum wage earner would outweigh job losses or companies consequentially being unprofitable.

      That is part of the relative appeal to me of a basic income – it gives workers the ability to bargain fairly, and then gives back to individuals and employers the freedom to make the decisions that suit them.

      In the absence of a guaranteed basic income, I’d have to support the raising of the minimum wage towards the living wage: I believe the improvement in job quality, productivity and life for the minimum wage earner would outweigh job losses or companies consequentially being unprofitable.

      Reply
  2. Pingback: Minimum Wages | Guy Lipman: Engaging Work

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