It Is Time For Basic Income

It is time for Basic Income. This idea, endorsed by a range of economists from a variety of political camps, has always seemed more of a distant dream than a reality. But productivity and standard of living increases made Basic Income practical and logical. For the purposes of this series of blog posts, we will be discussing the issue from a US centric lens, but practically speaking much of the world could move this direction shortly.

What is Basic Income?

Basic income is providing every citizen regular, flat cash payments unconditionally. In other words, if you can prove you are a citizen, you get a regular paycheck.

What are the definite benefits of Basic Income?

• It is the most efficient possible form of wealth redistribution because there is no bureaucratic overhead needed.  More money reaches the poor directly.
  
• It is more equitable than retirement plans, which transfer wealth from young to old.
  
• It enables people to work on only what they want to.
  
• It improves opportunities for individuals to use their Basic Income to get an education, start businesses, or make investments.
  
• The amount of Basic Income could rise over time with productivity & automation growth.
  
• It would enable resources spent on the current bureaucracy to work on other tasks beneficial to society.
  
• It reduces the marginal tax rate for the poor, creating better incentives.  Currently, the poorest receive a combination of unemployment, food stamps, and other government subsidies, which often go away if they take a job.  Each of these issues create in effect high marginal tax rates.  In extreme situations, it means people can go back to work and make less money than before.  With basic income, there is more incentive to work, as everything you make is additive.
  
• It should replace unemployment, which is pay to not work, which creates a perverse incentive.  
  
• It should replace minimum wages, which incentive employers to reduce jobs.
  
• It reduces political corruption.  There are fewer government bureaucrats and fewer spending levers to grant political favored groups favorable treatment.
  

What are probable benefits of Basic Income?

• It would provide a more stable consumer purchasing base, stabilizing the economy.
  
• It would reduce crime as a result of lower levels of desperation, particularly among the youth.
  

Isn’t this socialism/communism etc?

There are people who conflate redistribution with market mechanisms, such as people who say Income Redistribution’s Logical Conclusion is Communism. In reality, redistribution and centralized spending are only perfectly aligned at the extremes. The below graph shows how when you have something between “pure capitalism” and “complete redistribution”, you can opt to provide more or less redistribution in a more or less centralized fashion.

Neither pure capitalism nor complete redistribution exist in the world today. Unfortunately, “centralized redistribution + capitalism” has proven to be the most common middle ground, with varying degrees of redistribution. This isn’t surprising. Public choice theory theorizes that political elites want to control the distribution of assets in order to increase their power and influence.

Centralized spending mechanisms have generally been proven to be inferior to market based methods of allocating resources at scale. For example, centralized redistribution has failed to effectively cure poverty, despite spending $20,610 per person below the poverty line. In general, decentralized market based mechanisms have proven to be the more effective means of allocating resources and motivating people to optimize around growth. Combining income redistribution and decentralizing spending would solve poverty today.

What about pure capitalism + charity?

While people could theoretically survive off the charity of others, advanced artificial intelligence and robotics are likely to increase the portion of the population who are unemployable. As a society, we would have to be very generous indeed to support an ever increasing population of the unemployable.

The term “unemployable” is a part of the problem. There is no fundamental reason that humans should have to work after automating most of life. We should prefer to live in a world where nobody has to work to survive. Enabling most of our race to live a life of leisure should be something we strive for. People are passionate, with diverse interests. We expect to see a flourishing of culture, science, and progress in a world after Basic Income.

Summary

There can be a healthy debate about the amount of redistribution that is appropriate in a society. However, society wins incredibly if we implement Basic Income.