Economic Growth

A Basic Income for All: Dream or Delusion?

Tamzin Booth, Business Editor, The Economist, United Kingdom, Guy Standing, Research Professor in Development Studies, University of London, United Kingdom, Michael Sandel, Anne T. and Robert M. Bass Professor of Government, Harvard University, USA, Neelie Kroes, Non-Executive Member of the Board, Open Data Institute, United Kingdom, Amitabh Kant, Chief Executive Officer, NITI Aayog, India. speaking during the session: A Basic Income for All: Dream or Delusion? at the Annual Meeting 2017 of the World Economic Forum in Davos, January 18, 2017Copyright by World Economic Forum / Greg Beadle

Image: Greg Beadle

Vesselina Stefanova Ratcheva
Head of Metrics, Communication Strategy and Coordination, World Economic Forum
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This article is part of: World Economic Forum Annual Meeting
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The structure of employment is changing. Shifts in the global economic landscape, particularly economic disruption, are resulting in declining numbers of low-skilled jobs and a shift to higher-skilled opportunities. A number of the jobs created are, on average, less secure and less well-paid, leading to a squeeze on the middle classes and the emergence of the precariat. To seize new opportunities, we will need to see significant changes to education ecosystems across the globe. In the process of shifting gears, governments should consider reforms to social-protection mechanisms to avoid long-term damage to the social fabric.

Many commentators are now looking to basic income as possible relief to the consequences of the changing labour markets. This model is not new, says Professor Guy Standing, Research Professor in Development Studies, University of London, and Co-President of the Basic Income Earth Network, but it is being examined with renewed vigour. Fresh experiments in the delivery of this new form of social security are under way in Finland and California, and there is some indication that India could soon follow suit. Amitabh Kant, Chief Executive Officer, NITI Aayog, India, says that politically elected governments risk the emergence of radial social movements if they fail to deliver job growth.

Support for basic income comes from both left- and right-wing politicians. It can refer to a variety of arrangements and the devil is in the detail of its execution. And this instrument has the potential to cannibalize other welfare and poverty eradication measures, absorbing this means of funding.

Kant believes that existing welfare schemes and funds from India’s 2016 demonetization policy could be repurposed into a basic scheme, which is structured as an interest-free loan. Demonetization in India has brought the country’s $3 trillion shadow economy out of the grey market, and basic income could have a similarly positive effect on reforming India’s current public distribution and rural employment guarantee schemes. By paying basic income directly into citizens’ bank accounts, the scheme would have the added benefit of decreasing corruption by reducing “middle-men interaction”. Kant says that given the protectionist international climate, boosting the consumption power of domestic populations could prove to be an especially salient strategy.

Standing emphasizes two core rationale for basic income: social justice; and security from domination by figures of authority. Both are based on principles of community cohesion harking back to the 18th-century English philosopher Thomas Paine. This way of looking at the rationale for basic income points to the same outcome as the typical Silicon Valley argument for basic income but follows a very different logic from how such efforts should to be focused. While the Silicon Valley argument takes an individualist perspective as a starting point, the ethical perspective, highlighted by Standing and Michael Sandel, Anne T. and Robert M. Bass Professor of Government, Harvard University, stands on a foundation of social embeddedness. We all benefit from the labour of our co-citizens and of the generations before us. So, schemes such as basic income can be considered a kind of public inheritance.

The core question that seems to remain is how to fund and structure such programmes, not whether to do so. Five guiding principles can aid efforts in this direction:

1. Create standards that rest on the idea of community solidarity

2. Be precise about the budgetary need to bring such schemes into effect

3. Consider ineffective programmes aimed at the same objectives whose funds can be repurposed to meet funding requirements

4. Make any conditions to receiving basic income – such as minimum political participation – apply to every citizen; avoid conditional basic income schemes aimed specifically at the poor

5. Avoid slipping into clientelism, whereby policies benefit most of your strongest electorate

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