Basic income – the state provides a check and checks out

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Basic income is discussed also in Sweden as an alternative to today’s public system of citizen’s economic security. The idea is to give every adult the same amount of money every month. Without offset. Instead social insurance and other government transfers are abolished. The state provides a check and checks out.

Expected high unemployment due to an accelerating automation is one reason often mentioned for introducing basic income. Another reason is the degradation of the societies’ social protection against poverty. Basic income is in both cases seen as the means of redistributing money.

Basic income is being investigated in several places and in different forms around the world.
Basic income is considered to reduce poverty, exclusion, ill health, crime and prostitution and avoid stigmatization in the assessment to get social benefit.

Both thinkers at right and left speak for basic income. The left parties Podemos in Spain and Syriza in Greece speak about basic income. The right wing government of Finland is investigating whether basic income can reduce bureaucracy, provide lower threshold effects and subsidize small businesses without disadvantaging others. At the turn of the year two thousand unemployed will get 560 Euro a month, regardless of whether they will get a work or not. On June 5, 2016, 77 per cent of the Swiss population voted against basic income (voter turnout 48 percent).

In Sweden there is a support for basic income in the Green Party, in environment -left wing circles and in a labour critical liberal flow. Members of the Green Party argue that basic income promotes ecologically sustainable development through subsidy of repairs and reduced consumption of unnecessary gadgets. They also believe that the basic income will vitalize the democracy through its subsidy for voluntary work and cultural life. Value conservative consider basic income as a care allowance, allowing women to stay at home and look after their children, the sick and the elderly

A cost of 140 billion per year
What would the cost of basic income be in Sweden? The lowest collectively agreed pay for the 18-year-olds in Sweden is EUR 1580 per month. If all above 18 receive that amount, the cost will be EUR 140 billion per year. The entire public sector expenditure in Sweden is about EUR 200 billion. Even if all other aid be abolished, it will be a very sharp rise in government expenditure. Where is the power that can re-allocate such large amounts of money?

Higher tax on the automated capital is an appealing solution for the financing of a basic income. But without a sharp leap in productivity, a substantial higher tax on capital is neither politically nor economically possible.

Basic income might be financed by higher taxes on labour, real estate and consumption. But, would the people who work really want to pay for those who can work but do not want to work? Society has earlier given priority to those who need assistance. The increased productivity in the last decades has allowed longer parental leave, partial retirement, reduced taxes and reduced annual working hours. The current average number of full-time working hours was 31.3 hours/week in March, 2016, according to Statistics Sweden.

How many worked hours needed?
Proponents welcome that basic income results in fewer paid worked hours. But one obstacle is that it will take many years before the automation reaches a sufficiently wide scale to perform the necessary work for the survival of society. The productivity in the Swedish services sector has been very low over the past seven years and there are no signs of any substantial increase.

In the discussion of an aging population the argument is the opposite. We work too few hours to ensure the welfare of all. To enable more worked hours, there is a discussion on education for elderly, better work environment, work that promotes health, job redesign and full time employment instead of involuntary part time or short-time limited employment. Basic income may result in less priority to retrain people with disabilities into job or to adapt work tasks to suit a hindrance. With basic income, the rate of early retirement for people with disabilities may rise.

Basic income will probably cause significantly more unpaid house work and casual work. A significant shift to subsidized individual work does not absolve us from labour toils. Paid work organized on a large scale has proven to be effective to develop technology and to rationalize. Individuals have a limited ability to do that by themselves. Platforms on the Internet to match buyers and sellers of labour are of little value if the work is not productive.

What kind of basic income?
There is a variety of proposals for basic income. Some are similar to a basic amount at subsistence level to be given to all in need. But a basic amount is hardly basic income because there is a test to get it.

Negative tax is closer to basic income. Those who do not have income, and do not pay taxes, instead receive money from society. A further step towards an ideal basic income can include both to significantly raise the basic allowance (limit of income tax) and to impose negative tax.

Negative tax with a high basic allowance is a project for lower taxes. This proposal and also the basic amount can suit for countries with low taxes and a small government budget. The citizens then have to purchase a private insurance policy to cover loss of income in case of illness or unemployment. The ideology in these cases is to interfere in the individual’s life as little as possible by the state.

The public social insurances in Sweden were formed to cover for the main part of your lost income. You had to qualify for getting the benefit. People simply wanted to have it that way. It contributed to security, individual freedom and to peace and prosperity. Experience from the 1930s and the World War II was that even better-off people could lose income and then it was not enough to receive a low basic amount.

Close to an ideal basic income is a social security supplement with a simplified assessment of needs. This model suits a jointly-funded welfare state. It benefits the poorest while it remains a means-tested but less stigmatizing payment. Such a reform was proposed in the 1980s, but could not be funded. After the 1990s, the parties to the right instead started to talk about cheating in social insurance.

The good work
Proponents to the left argue that basic income encourages people to quit jobs with poor conditions. -You have your basic income to live on.
Surely we should be able to leave a bad job, but without losing too much in income. Real unemployment insurance provides that possibility. A more responsible action than to leave a job with poor conditions is to stay and develop the job. At work we can influence the work conditions and also get a better share of the fruits of the labour.

The dream of an ideal basic income may come true in the future. But firstly we need to adjust the balance between capital and labour to our favour. The Swedish Trade Union Confederation decided at its congress in 2016 to further develop the concept The good work, including a sustainable perspective. Among challenges there are aging population, automation, platform- and gig economy. Among areas to develop we can count conversion to new jobs (vocational training, training at work, unemployment insurance, innovation at work) and democratic work organisation giving healthy and efficient workplaces.