1.5.9.7 Equality of (Basic) Income

Version 1.0 October 2022                             (Previous Version)

As indicated in the previous subsection, many modern welfare states provide a regular income to certain groups who are deemed to be worthy of social support.  These incomes are generally called pensions, and are typically granted to elderly people who have retired, the disabled, perhaps single parents, perhaps some students, and some of the unemployed who are looking for work.  There is enormous criticism and controversy over these pensions, whether the recipients really are entitled to them, whether the income is too low to live on, or whether they are unaffordable by the nation.

Some oil rich countries, such as Saudi Arabia or Qatar perhaps, pay their citizens a regular income without expecting anything in return.  Some of these citizens also have jobs, but many pay overseas workers from poor countries to provide personal services and do the menial work.

●   More and more people are starting to say all governments should provide everyone with an equal regular income, regardless of whether they deserve it.  it's called a universal income. 

*    The theory is that modern economies are so efficient and productive that we can charge enough taxes to pay everyone a minimal, basic, but livable wage, while businesses continue to make a profit.  The universal income would be set at the lowest rate possible for a modest lifestyle.  The income for children and adults who can't look after themselves would be paid to their carers. 

*    The universal income would be added to any other income and taxed progressively, so those on higher incomes pay a higher proportion of their income in tax.  For the super-rich, the universal income payments would be almost totally clawed back in tax.  Taxes would also be raised by value added taxes or consumption taxes, and financial support could come from sovereign wealth funds. 

*    Aged and disability pensions and so on would be replaced by the universal income, and doing so removes the need for the bureaucracies managing these schemes, so the universal income would be very efficiently managed.  Some evidence shows reduced crime rates and improved health outcomes.

      Many details need to be worked out. 

●   It is assumed that many people, perhaps 5% of the working age population, or perhaps 25%, would choose to have no other income, but that the others would work, for the pleasure of it, for the social status, for altruistic reasons, for a sense of obligation to contribute to society, or for the extra money, which they can save or spend on luxuries (because their basic needs are already met). 

      Note that many very rich people still work, even though financially they don't have to.

      And many people work, even though they are paid nothing, as volunteers or to support the family.

●   Many people think it is unaffordable.  Many think that such a high percentage of the population would not work that the scheme would not be financially viable.  Many think it is an abomination to give people who don't deserve it any sort of income: we don't want to encourage laziness; it is one of the so-called deadly sins, and it would be morally corrupting.  And it may be, in some cases.

●   More importantly, some think that taking away the need to work for an income takes away a significant motivation in life, reducing the opportunity to participate in society, leading to mental health problems.  Others think it will free up most people to be creative, in both cultural and economic spheres, so that society becomes culturally enriched and even more productive, so the system makes itself even more viable and effective in a positive feedback loop. 

●   Additionally, if workers have a basic income, they will not be desperate for a job, and will refuse to take on low paid, menial, dirty, degrading, repetitious, soul-destroying, alienating work, so employers will not be able to continue exploiting workers, and must restructure and improve productivity, partially by automating such jobs.

●   In previous centuries the whole idea of an unearned universal income was unthinkable. 

*    In modern times, there have been many limited trials, targeting eg a specific needy group (18-20 year olds leaving care) or a sample of a specific area, but most have not been designed with the intention of continuing or broadening the scheme.  The idea is promoted in the policy platforms of several left leaning political parties.

*    Equal incomes have been tried in various communes, most notably in Israeli Kibbutzim.  Originally mostly agricultural and part of the Zionist expansion into Palestine, in a Kibbutz everyone was expected to work as best they are able, but everyone was paid the same.  As time progressed, there were tensions within the Kibbutzim as equal wages were seen to be unfair, and problems with the huge disparities in wages outside the Kibbutzim.  Although there are still many Israeli Kibbutzim, which are highly productive in other industries as well as agriculture, few communes now retain the common basic wage.

●   There are ongoing concerns about the financial viability of a universal wage, its fairness to the workers, its risk of encouraging free-loaders, and so on. 

●   There is also the model of a better managed welfare system, which is politically acceptable (almost everywhere outside the USA) and in many respects financially viable.  Some welfare pensions (eg age pensions in Greece and France) were not only expensive, but were not targeting the poorer sections of society, so reforms are required to ensure state welfare targets the right people.  But universal health care, such as that provided in Australia, despite its failings, provides much better health outcomes for the vast majority of the population at half the cost to the health system in the USA. 

●   So it seems preferable to provide more widespread access to services, in accommodation, health, disability support, and emergency income support, rather than a universal income.  With improved management, we can allow the service recipient an appropriate degree of control over the services delivered, while ensuring that these are professionally managed to be efficient and effective.