Thursday, July 4, 2013

Basic income guarantee


Introduction:

In western societies where capitalism has won the war of ideologies 25 years ago, the notion of giving everybody a salary in exchange of nothing seems outlandish, unfair even for people who have the impression that they're giving away some of their life doing their daily job and who look down on the jobless.

But this reaction is deeply modeled by the social norms and the public discourse that we have learnt through television and through the prejudice of our parents. These norms have also been built or influenced by the society of 25-50 years ago, when full employment guaranteed everybody a job and a salary, with the prospect of never worrying that they wouldn't be able to pay the bill. Also, this was a time when countries had not yet buried their economies in impossible debts owed to private banks, creating extra tax burden for the workers. In short, we are highly prejudiced and we must unlearn our prejudices in order to judge new models of society based on their true merits.



Seriously?

Serious economists have studied the Basic Income Guarantee (BIG). While I won't be able to mention any native English speaker among them, I suppose it might be possible to find translations or English versions of works by Bernard Friot and Etienne Chouard. Their interviews and lectures (in French language, sadly) are numerous on Youtube.

Among the preconceived ideas for opposing BIG is the idea that if people get money for nothing, then they will never want to work and that either the system will reward bad behavior or that the system will crumble economically. Some people indeed will chose not to work. But what truly matters is not if some people chose not to work... The meaningful question is rather if "too many" people make this choice. Also, once again we must unlearn our prejudices... BIG is not about showering mobile phones, huge TV screens and Mercedes cars on parasites of society. BIG is about offering the bare minimum, a roof over head and food (not caviar!) in the stomach. No more, no less. So if some people decided not to work, they would be only guaranteed survival. For people to access comfort through consumption of comfort goods, they would still need to work and earn a salary.

A couple of questions which are central to the BIG model are:
 - if you were guaranteed a roof and food (nothing more) without working, would you still want to work?
 - if other people were guaranteed a roof and food (nothing more) without working, do you think they would still want to work?
Of course, there is a strong divergence between how we think we will react and how we think that other people will react. We are cynics. 60% of people say they would still want to work and 80% think that other people will not want to work.


OK. Got it! But does it really work?

By giving people a guarantee that their life will not crumble because of leaving their job, BIG frees employees from the dependence relationship towards their employer. Nowadays, this relationship is being abused by employers who took money away from employees in order to offer outrageous rewards to shareholders. This is illustrated by the economic situation in France between 1981 and 2006. Let me recall some essentials of economy: GDP represents the added value. In 1981, salaries represented 60% of GDP. In 2006, salaries represented only 50% of GDP. That means that 10% of GDP was diverted from paying people who create value towards other costs. It happens that these other costs are mostly dividends. Shareholders were already getting a profit back in 1981. Otherwise, why invest? But now, their bank accounts are growing like crazy despite the Subprimes Crisis. Let's be concrete: 10% of GDP for France represents €200 Bn. This is 2x bigger than the government's budget deficit (cash in: 200 Bn, cash out: 300 Bn, deficit: 100 Bn). But this is not a typically French thing. It's everywhere in the world and even the Bank for International Settlements (aka. "the Central Bank of Central Banks") expressed concern over this imbalance which will drive countless workers into poverty and as a consequence will slow down the economy.

So, BIG has the capability of freeing workers and offering them a safety net and a shot at stopping a job that they don't like in favor of other activities. Either another more fulfilling job or personal activities. As BIG was experimented in a few places, villages of thousands of people, it showed positive results with a growth of activity and an improvement of the economy. The only people who get hurt by BIG are the people who make their profit from abusing workers.


Downsides ?

It seems too good to be true, so what's the catch? There are 2 main reasons why BIG will probably never be implemented in our lifetime in Western countries... The first problem is about unpleasant jobs. There are jobs that are not desirable. For instance: garbage collection. If nobody wants to do these jobs, a system needs to be put in place. Either create a financial incentive to attract workers, or create a sanction for NOT doing it, or yet again organize turns of duty service tending to these jobs. If you're philosophy-literate, this brings us directly back to Plato's The Republic. Another problem is: the current political systems are locked by rich and powerful people who would get no benefit from giving away this dream world where they get to exploit others and reap the benefits.


Conclusion

BIG is a dramatic change of paradigm and it will probably never come into effect despite its humanist dimension. Still, it is a very useful intellectual tool to compare the world we live in with the world we (by consensus) desire. We all want for people to have food and shelter guaranteed. We all want to have the freedom of leaving an unsatisfactory job without the threat of what will happen. We all want for people to have the opportunity of doing what they like (or what they're content with) rather than being locked in a terrible job just so they can pay the bills. Seeing the divide between the ideal and the actual world, and the political reasons keeping us away from the ideal one is a useful function of the Basic Income Guarantee. Finally, it also opens our minds to realize how our way of thinking is biased towards what we know and how hard it is to unlearn our biases.

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