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Arguments | Business for Basic Income

Why universal basic income?

Change in working environment

We go through a huge change at labour markets and in working environment. Digitization and automation increasingly work instead of us. One machine can work for one hundred people. More value gets created with less humane work-input. But without new social policies, the gains of machine work go fully into the machine owner’s pocket. The hundred people who did the work of the machines earlier, go away empty-handed. Already today we live in a world, where the richest 62 people own the same as a half of the world (source: Oxfam-report 2016). An unconditional basic income can provide equal participation at a minimum level of the earnings from automation and digitization to everyone.

More entrepreneurship

A basic income gives each person a seed-money which many will use as start-up capital. This allows to realize independently enterprises. Today the notion of failure prevents many initiatives. With the security of a lifelong basic income the self-confidence will increase and many procreative ideas will become reality. The increasing establishment of small businesses will lead to more innovation and competition. This enhances the economic output. A large experiment with basic income in Namibia clearly showed an increase in entrepreneurial spirit: With basic income 29% of the national earned incomes came from independent activities.

Redistributes money from capital to labor

Even if technology doesn’t lead to high unemployment, it may well lead to lower wages and greater inequality. Capital – equipment and machinery that helps to produce things – is now creating a greater share of output compared to labour – human workers. This allows business owners, who own the capital, to pay workers the same or less while more is produced, so they make more profit for themselves. We are already seeing that output per worker is increasing, while workers’ wages are not. In the long term, this will mean that business owners make more and more money, while those who don’t own capital will make less and less. Basic income alleviates this by taxing the rich (who will probably own capital) and giving money to the poor (who probably won’t), even if they can’t find a job.

Reduces the gender "pay gap"

Women, on average, make less money than men, and debaters of this issue fall into two camps: (1) those who want to reduce that gap to help women achieve financial freedom, and (2) those who want to prevent the harmful effects of government pay-mandates and micromanagement. Basic Income is capable of satisfying both camps by giving all citizens a base income, making women (and people in general) less dependent on their work-income. And it does so without removing any of the beneficial capitalistic incentives to work and provide value.

Prevents generational theft.

Most western countries already provide basic income to people of retired age. But, if a nation or its socialized retirement program goes bankrupt, or the socialized retirement program otherwise becomes unaffordable, in 20 or 30 years (due to fiscal mismanagement or simple birth rate demographics) then it is to the great advantage of current benefit recipients, and at the total cost to those who pay into the benefits today with the false promise of receiving them in the future. If entitlements are unaffordable/unsustainable, then the only fair solution is to provide the funds equally today.

Increases number of people in jobs they enjoy

As people will not be forced to take on a job, they will be more able to find a job that they enjoy (or that pays well enough to offset their lack of enjoyment). Having people in jobs that suit them better will help to improve mental health, as well as leading to an improved quality of goods and services.

“The key is self-employment” (Klaus Schwab)

Our societies increasingly require fewer full-time jobs. Work takes less time. It needs new working models and more opportunities for innovation and entrepreneurship. For the “uberization” of society, the unconditional basic income is the best condition, if it is paid at a level that allows a decent life and participation in society for everyone.

Improves mental and physical health and security

Mental health is one of the largest public health problems in most developed countries. The knowledge that the basic income will ensure a basic standard of living in any circumstances will provide a sense of mental security, especially when the economy is performing poorly. The removal of various dehumanising tests and stigmatisation of anyone who receives welfare payments will also serve to improve mental health. There is also evidence that poverty itself reduces cognitive capacity, comparable to a loss of 13 IQ points, or chronic alcoholism as compared to sobriety. A basic income would remove this cognitive impairment. The rising cost of health care is a cause of great long-term concern, and basic income could lower this cost. In the Dauphin, Manitoba pilot experiment in Canada, an 8.5% reduction in hospitalization was found to be a direct result of the minimum income. This was attributed to the reduction in workplace injuries and family violence resulting from the rise in incomes.

Guarantees a minimum living standard

Though it’s subjective/politicized, people may be entitled to a certain basic standard of living, regardless of whether they are momentarily able to participate in the labor market. Universal Declaration of Human Rights, Article 25, states, “Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.” (United Nations, (UN)).

More room for negotiation, more market, less survival anxiety

A Basic Income creates a real labor market, because every employee gets more options. Everyone is free to decide where and how he wants to bring in his manpower and expertise. This strengthens the bargaining power of employees. With basic income companies are called upon to take their employees seriously as free people and employees so that they can develop best. That means win-win for employers and employees.

Increases bargaining power for workers

Workers will be able to afford to refuse a job if the employer abuses its oligopoly or the workspace has poor conditions, so firms will be forced to improve the employment conditions and wages for their workers. This will happen as a natural result of negotiation between firms and workers, and will not require government intervention or unionization.

Lowers need for government regulations on the labour market

Policies, such as the minimum wage, will become less necessary with the basic income, as people will already get enough money to live in dignity. Thus the power of workers in negotiations will increase as they are more independent with a basic income. This will allow the government to remove some of the regulations on the labour market: This would free the market-mechanisms and provide benefits for both: employers and employees.

Increases charitable work and academic research.

Much work in the charitable sector and other vocations (e.g. open-source programming, academia, or the arts) is socially beneficial but not profitable, so people have to do it in their spare time, along with a traditional job. A basic income would allow these people to spend more time on work that is socially beneficial but unprofitable for the individual.

Leverages the multiplier effect

“The mechanism that can give rise to a multiplier effect is that an initial incremental amount of spending can lead to increased consumption spending, increasing income further and hence further increasing consumption, etc., resulting in an overall increase in national income greater than the initial incremental amount of spending.” It is this same effect that is seen in the differences to the economy the effects of $1 being spent by high income earners versus low income earners have. As published in a recent report, “All those dollars low-wage workers spend create an economic ripple effect. Every extra dollar going into the pockets of low-wage workers, standard economic multiplier models tell us, adds about $1.21 to the national economy. Every extra dollar going into the pockets of a high-income American, by contrast, only adds about 39 cents to the GDP.” This means a basic income could show this same multiplier effect on the entire economy by redistributing money from high earners to low and middle earners where the effects of spending is amplified.

Less bureaucracy, more options

With basic income the jungle of bureaucracy and rules can be diminished. This reduces the influence of the state and strengthens citizens.

  • National workplace regulations become partly obsolete
  • it takes less job protection
  • statutory minimum wage is unnecessary because everyone can negotiate confidently
  • state pension can be rethought and reorganized
  • state interference is no longer through social programs into personal rights
  • people are treated mature
  • the state doesn’t need to define criteria and check upon them before it grants money. This streamlines the bureaucracy
  • all state welfare systems can be eliminated up to the amount of the basic income

A basic income promotes the economic performance

  • People who like to work, work more productive and are less sick
  • There is more incentive to develop good robots to take over the unloved work
  • People can increasingly devote creative, coordinating, planning, artistic, solidary or manual work, which they love to do and that can not be done by robots. This increases performance and improves results.

“The economy frees the people from work” (Götz Werner)

Thanks to digitization and automation working time declines and sets lifetime free. A basic income can enable people, to fill these open spaces with their innovative ideas. While today the paternalistic state usually checks the individual needs before any financial assistance is granted, a basic income promotes the autonomy of the people and makes that part of the income unconditional, which is necessary to live and be part of society.

Reduces government bureaucracy

A lot of government workers are required to ensure that welfare recipients are not claiming their benefits fraudulently, and another lot of bureaucracy is needed to administer the complex systems of welfare payments and tax credits. The increased need for personal tax advisers also sucks skilled workers out of the productive sector. A basic income would hugely simplify the welfare system by replacing most of these bureaucracies, which would reduce the national administration costs immensely.