Fri, Jan 18, 2019 - Page 9 News List

Basic income the weapon to battle giants threatening society

Eight main factors threaten the economic system of the 21st century and a basic income to redistribute wealth would play a central role in significantly weakening them

By Guy Standing

Illustration: Mountain People

In 1942, William Beveridge issued an epoch-defining report that established a model for welfare states in the post-World War II era. He recognized that the old social protection system had broken down and that it was “time for revolutions, not for patching.”

The challenge, Beveridge said, was to slay five giants: disease, idleness, ignorance, squalor and want.

Today, it is the post-1945 income distribution system that has broken down irretrievably, threatening economic failure and jeopardizing what Klaus Schwab calls “Globalization 4.0.” Today we must fight eight new giants. To do so, we urgently need a 21st-century income distribution system in which a basic income plays a central role. Such a system might not slay today’s eight giants, but it would significantly weaken them.

The first giant is inequality — the huge growth in income and wealth disparities within countries that goes well beyond what is captured by measures such as the Gini coefficient. An increasing share of total income is being captured as rent by owners of physical, financial and so-called intellectual property. Meanwhile, real wages have stagnated or fallen, and ever more people are falling through widening holes in the social safety net. Traditional redistributive tools such as direct taxes, collective bargaining and labor regulations cannot reverse these structural shifts, however much those on the left might wish.

What is needed is a new income distribution system that restores the market economy rather than distorting it. By recycling rents currently taken by the plutocracy and elite to everybody, a basic income paid as a common dividend would be the anchor of a reformed system. Contrary to what some critics assert, a basic income would not be regressive. Paid equally and quasi-universally from rentier income, it would necessarily be progressive.

The second threat is economic insecurity. The welfare state was supposed to insure workers against contingent risks and shocks. However, it is failing because of reduced social insurance coverage, flexible labor markets and widespread technological disruption, among other causes. Moreover, today’s economic insecurity is characterized by uncertainty about the future rather than known risks. People feel threatened by “unknown unknowns” that, by definition, cannot be insured against. In an open, globalized economy, only a basic income can guarantee basic security.

The next giant, and closely related to the first two, is debt. Millions are living on the financial edge, with unpaid rents, utility bills and high-cost credit cards. A significant rise in interest rates or an economic downturn could trigger an avalanche of distress. True, a basic income would not solve the debt problem, but pilot projects show that when people know a regular amount is coming in, they are likelier to pay down debts and gain greater control of their finances.

Fourth, and again related, is stress. This is a global pandemic, with an increasing number of people suffering from depression, mental illness, suicidal tendencies and physical ailments linked to job pressures, insecurity, inequality and feelings of inadequacy among many people who perceive themselves to be just “licking at the window” of consumerism. A basic income would not cure the stress pandemic, but it would reduce its intensity and prevalence.

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