One Finite Planet

One Finite Planet

How the ‘basic income’ proposal could change society

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The current wealth distribution system is an already a broken system about to face severe attack. As discussed in Robots & Job Terminators, the role of employment is set to change.

canada20flagflagbigfinlandOn engadget, the post How will you survive when the robots take your job? outlines the ‘basic income’ proposal, as put forward by many in the tech industry and being experimented with in Canada, Finland and the Netherlands. This articles provides a great starting point and conveys the basic idea and if unfamiliar with the idea it makes sense to read that article first. This post is about looking further, in terms of thoughts about what else should change if a ‘basic income’ is introduced and what would be needed to make such an idea work. What would such a measure cost, and what would be the impact on society of a total package, of a ‘basic income’ together with a logical set of policies to create a total package?

What would be logical overall package?

Elimination minimum wages.

The minimum wage would come from the ‘basic income’ itself,  which means additional wages paid by an employer raise the employee further above the minimum.  Even unpaid work ($0 per hour) as a caregiver or charity worker still would ensure the person performing that work has the minimum wage.  This would simplify situations where people must be trained before they are productive and a variety of other scenarios.

A quote from Bernie Sanders in the Engadget article could confuse::

I am absolutely sympathetic to that approach. That’s why I’m fighting for a $15 minimum wage…

The ‘minimum wage’ is an alternative method to ensure people receive a minimum wage, and Senator Sanders is supporting the concept of people achieving the minimum wage.

With the employer not facing the hurdle of a minimum wage, and potential employees not needing to be of sufficient value to an employee on day one, many more jobs could be exist.  The concerns people have of the idea are that people may not bother to accept employment, or that employers will abuse the ability employ lower cost staff. I suggest both of these fears are unfounded, and both will improve compared to the status quo, and I will discuss this in more detail in a follow up post.

Flatter Taxes with Increased Sales/VAT/GST taxation.

A sound principle is to tax that which the government seeks to discourage, and not tax that which the government wishes to encourage.  On this basis, taxing spending is preferable to taxing earnings, since the government should encourage people to earn income.

Different counties use the labels ‘sales tax’, ‘Value added Tax’ or ‘Goods and Services Tax’ but all are related and work on the principle of collecting tax revenue when purchase are made.  A limitation with such taxes is that they are basically flat taxes and cannot be ‘shaped’ to attempt to exempt those who can least afford to pay, or target those best placed to pay.  “Excuse me madam, before I can process this sale I need to know your income bracket” is never going to work.

Shifting tax base from income tax to ‘sales’ type taxes generally requires some program to assist low income earners, and a ‘basic income’ does exactly that.

Where does the money come from?

Switzerland had vote to decide on a national scheme, and the biggest issue was not cost, but rather the risk the immigration would increase and attract specifically those planning not to work.

In a country with an existing welfare system, the ‘basic income’ becomes a much simpler, lower cost way to provide welfare.  The result should be that those who enjoy sufficient income will see their ‘basic income’ recovered by the government through taxes and have the same circumstances as prior to the system.  This leaves low income earners and the unemployed and the main beneficiaries, and many of these are welfare beneficiaries today.

Will some people simply elect not to work?  In the end the cost is complex and will be again explored further in a follow up post.

What are the social implications?

Will people elect not to work? Will any state or jurisdiction to adopt such a scheme become a magnet for those who wish not to work?

Employment provides three roles in society today:

  1. labour to generate wealth
  2. salaries and wages act to share or distribute wealth
  3. occupation provides identity and a self of self worth

All of these create a complex picture.  Follow up post number 3 🙂


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