Basic Income FAQ's
Basic Income Frequently Asked Questions (FAQ's)
Basic Income FAQ’s answered by Geoff Crocker.
What is Basic Income?
It’s a regular income paid to everyone without any conditions.
Why do we need a Basic Income?
Because it’s fair, as we all deserve to benefit from nature, technology and the infrastructure we all inherit. Also automation may lead to more job losses but will provide the things people need, so they’ll need income other than wages
How would basic income work?
Everyone would automatically receive a regular income paid into their bank accounts.
Are Basic Income and Universal Basic income the same?
Pretty much these are different ways of describing the same thing.
Is Basic Income and Citizens Income the same thing?
Yes, but basic income has become the more widely understood terminology.
Why is Basic Income coming to the fore now?
Because people are concerned about ways the economy is not working well, for example, in generating huge inequality, job losses, in-work poverty, economic crises and austerity policy. Basic income funded by sovereign money can change all this.
Is Basic Income about self-preservation of the human race or developing it?
Both. Basic income preserves us from poverty and austerity but also allows us to make other lifestyle choices, perhaps choosing less work and more of other creative activity.
Is Basic Income a “right-wing” or “left-wing” ideology?
Neither, although right-wing and left-wing politicians support it for different reasons. Basic income is an ideology of concern that people have a reasonable standard of living which is available from automation. It avoids the humiliation of intrusive means-testing for people needing a living income.
Will Basic Income be taxed?
Yes, this will only be fair as rich people will receive basic income too.
Does Basic Income give the Government more power over the people?
This could be a threat, for example, if the government could cut off basic income to people it didn’t like. So it would have to be administered by an independent organisation.
Is Basic Income being piloted?
Micro-pilots have been run in many places, most recently in Finland. But these haven’t tested the macro-economic effects, or the wider claims of enhanced lifestyle made by basic income advocates. We need to implement basic income across a whole country’s economy to see the true benefits.
When will Basic income happen?
When sufficient people realise it’s urgently needed.
What are the benefits of Basic Income?
It prevents huge inequality, it delivers a decent standard of living, it gets rid of expensive, intrusive means-tested welfare benefits, it creates sufficient demand in the economy, it allows wider lifestyle choices.
What is the downside of Basic Income?
None. People worry that it would be a disincentive to work, but we may need to work less in the future, and current welfare benefit systems are the worse disincentive to work, as claimants lose benefit for any wages they earn.
How can Basic Income be funded?
It can be afforded by reducing existing means-tested welfare benefits, or by increasing some taxes, or by introducing new wealth taxes, or by the government issuing ‘sovereign money’ ie debt-free money, but only up to the level of the output in the economy so that inflation is avoided.
Does Basic Income need to be by Country or could it be wider than that?
It can certainly work within any one country economy. For example, if the £166bn of household debt taken out in the UK before the 2007 economic crisis had been basic income instead, then there would have been no crisis!
Does every Country need to participate to make Basic Income work?
No, it can work very effectively for any one country. It’s just another way of funding aggregate demand in the economy.
Can the UK afford Basic Income?
Yes, it can fund it by extending less household debt, and by issuing ‘sovereign money’, ie debt-free government money up to the level of the full potential output of the economy.
Can the US afford Basic income?
Yes, it can fund it by extending less household debt, and by issuing ‘sovereign money’, ie debt-free government money up to the level of the full potential output of the economy.
Would Basic income be means tested?
Definitely not. It’s a fundamental principle of basic income that it’s unconditional. In this way, it avoids humiliating, intrusive means-tested welfare benefits which are expensive to administer and which often fail to get to the people who really need them, as take-up rates are often low.
What Countries have Basic Income?
No country yet has a comprehensive basic income system, although there are aspects of basic income in some economies like Norway, Alaska and perhaps some of the oil-rich Middle East economies.
What Countries are likely to adopt Basic Income?
There is lots of advocacy for basic income in all continents of the world. Perhaps high technology economies like Japan might be among the first to totally implement basic income.
Who benefits from Basic Income?
Everyone, because the economy will operate more efficiently, there will be greater social justice, people will have wider lifestyle choices, the environment will benefit from less need to produce to generate employment for wage income.
If Basic Income is so great, why is there opposition to the idea?
All radical ideas take time to be understood, appreciated and implemented. Basic income funded by sovereign money challenges financial and economic orthodoxy and so generates opposition if we only think conservatively and traditionally.
Will Basic Income cause inflation?
No, because basic income will only be issued so that in total it doesn’t cause the value of full potential output in the economy to be exceeded.
Will Basic Income increase house prices and rents?
No, it’s alternative policies like quantitative easing which have deliberately increased asset values. Basic income would, however, make houses affordable, and it was the unaffordability of houses from consumer income which caused the US subprime crisis in 2007.
What is the difference between Basic Income and Guaranteed Income?
None, as long as you don’t mean guaranteed jobs or guaranteed wages which are very different because they only apply to people in work, and work may well decline with future automation.
What is the benefits of Basic Income over Guaranteed Jobs?
Basic income is easy to define and implement and reaches everyone. Guaranteed jobs cannot always be made to work if automation is inevitably reducing jobs. Guaranteed job schemes are very difficult to define. Is everyone offered a job of the type they want, which they are qualified for, at a certain maximum distance from where they live etc?
Which would work best, Basic Income or negative income tax?
Basic income achieves a wider set of objectives and reaches everyone.
Would basic income replace the welfare system?
Standard means-tested welfare benefits would be replaced by basic income, but special needs welfare benefits for example for people with disability would be retained.
Would basic income replace state pensions?
Basic income could either replace state pensions or not. The main issue is that the total of all sources of consumer income, including pensions and basic income, does not exceed the value of output in the economy.
Why would the wealthy fund Basic Income?
Because the economic system needs consumer expenditure to be funded, and wages are decreasingly effective in sustaining a necessary standard of living. Wealthy people depend on a fully functioning economy with full funded consumer income
Why would people work if they are receiving a Basic Income?
They could choose to work less, and future automation might require us to work less. But someone receiving basic income has a greater incentive to work than someone on means-tested welfare benefits because they get to keep the extra income they make from working, whilst the usual welfare benefit recipient loses benefit for every unit of the wage they earn.
Would Basic Income kill entrepreneurship?
No, basic income would enable people to fund creative entrepreneurial ideas and activity.
Would Basic Income dissuade people from saving money?
Maybe, but currently, economies need people to spend rather than to save. An economic crisis comes when consumer expenditure is restricted by lack of earned income.
Is Basic Income just too radical an idea to be implemented?
For some people who think conservatively, yes, but after full consideration of the basic income proposal, it’s the current financial and economic orthodoxy which is wrong.
Would basic income be index-linked?
Yes, it would increase with the level of output possible in future more automated economies.
Could people opt out of Basic Income?
Why would anyone want to opt-out? People could always give the basic income they receive to others or to charity
Wouldn’t Basic income replace the lower nil tax band?
In some schemes yes, but not in a scheme where basic income is funded by ‘sovereign money’, ie debt-free government money issued up to the value of the output of the economy.
Would richer countries have to financially support developing and third world countries if they implemented Basic Income?
This could certainly happen if essentially more productive economies were able to produce for the consumption needs of currently poorer countries
Is Basic Income a step towards Communism?
It’s a step towards social justice, greater dignity than in means-tested welfare schemes, and human flourishing, but it avoids state prescription of behaviour and so promotes freedom rather than control
How could basic income be protected by a change in Government?
It couldn’t since governments are elected to implement policy, and it’s conceivable that a future government might be against basic income. But could current welfare benefits be eliminated by some future government? It’s the same question.
What is the learning from Basic Income pilots?
Not much except that people valued feeling more secure. But the pilots have only been micro pilots. They need to become nation-wide
Did Basic Income Pilots reduce poverty?
No, because they were not sufficiently widespread or sufficiently bold and adventurous.
Did Basic Income pilots improve standards of life?
Yes, they enabled people to feel free, dignified, and secure
What are the benefits of Basic Income over minimum wage?
A minimum wage will not be effective if there are fewer jobs available in future, more automated, economies.
Would Basic Income remove the need for a minimum wage?
Yes, because basic income is a policy which responds to the long term fact that earned an income is a decreasing part of people’s income requirement.
Would Basic Income be managed by each Country or a Central system or bank?
Each country should determine the basic income it decides to pay and then commission an independent body like a central bank to pay it out to people.
Would huge differences in the Basic Income by different Countries cause more difficulties such as immigration and economic migrants?
Yes, this is possible, as is the case with current welfare benefit system differences between countries
Will Basic income reduce inequality?
Basic income schemes have to be carefully designed to reduce inequality. They can certainly do so and this must be a requirement of their exact specification.
Would Basic Income eradicate poverty?
Basic income must be targeted to eradicate poverty, ie it has to be an essential requirement of the basic income scheme that it allocates income adequacy to everyone.
Would Basic Income devalue the Country’s currency?
Not as long as it doesn’t take the total aggregate consumer income above the full potential output of the economy
If receiving a Basic Income would people stop striving to improve themselves?
On the contrary, basic income would enable people to develop their capabilities more fully by releasing time for them to do so
When is it thought that Basic Income will be a necessity rather than a concept?
This web site shows why basic income is already a necessity as earned income is no longer sufficient to support a universally adequate standard of living.