Financing Basic Income: Addressing the Cost Objection

by Richard Pereira (Editor)

This Palgrave Pivot argues that basic income at a decent level is, in fact, affordable. The contributors approach the topic from the perspectives of three different countries―Canada, Switzerland, and Australia―to overcome objections that a universal program to keep all citizens above the poverty line would be too expensive to implement. They assess the complex array of revenue sources that can make universal basic income feasible, from the underestimated value of public program redundancies to new and so far unaccounted publicly owned assets.

129 pages, Hardcover

Published July 21, 2017

Reviews

[Andrew · Rating 4 out of 5]

Financing Basic Income: Addressing the Cost Objection is a series of three case studies discussing the costing and financing of Basic Income (BI), from three perspectives; that of Canada, Switzerland and Australia. The three perspectives discuss different financing mechanisms each nation could utilize to successfully adopt a BI program in each locale. For those who do not know, BI is an unconditional, livable wage paid to each member of a society by the government. This wage is a form of welfare, ensuring each person has access to X amount of dollars per year to ensure they are receiving an amount of money necessary to purchase goods and services required for an adequate existence. One of the main objections to Basic Income is its cost; often times these costs would be high (many billions of dollars), and financing BI is a difficult concept for many people. Where would the money comes from? Would my taxes go up? etc.

This book seeks to address these concerns by examining ways a nation could fund its BI programs. The three case studies differ in how they look to cost based both on the nation in question, but also sometimes using different vehicles to finance. First, Canada looks at multiple funding cuts that would heavily reduce the cost of BI in Canada. Implementing a BI program would allow the de-funding of redundant welfare initiatives, saving many billions of dollars. It could also be funded by reducing or removing tax schemes, like Canada's RRSP (registered retirement savings program) and TFSA (tax-free savings account) schemes, which disproportionately favour the rich. Targeting capital flight, taxing energy consumption, and rationalizing the bureaucracy are all considered as well. All told, these initiatives would make financing a BI program possible. In Switzerland, the author looks at a number of initiatives, focusing mostly on increasing VAT (value-added taxes), and rejigging the cantonal and municipal tax structures to ensure the money can be found. In Australia, the author examines taxing resource rents at a higher level, and utilizing Australia's export-focused economy to fund its BI program.

These initiatives are interesting and innovative, and doubly so because they do not seem to straddle any ideological line. The authors of each study avoid the ideological trap of falling into categories of "left" or "right" and instead focus on the feasibility of implementing their proposals. These proposals are often large in scale, and would take great political willpower to implement. Many of the initiatives, like energy taxes in Canada for example, are already politically unpopular. As well, each of these countries has a strong "middle class" political tradition, and taking away long beloved middle class tax schemes (like the RRSP and TFSA in Canada), or increasing the price of goods (VATs), seems like it would be political suicide to try and implement or argue for. There is an issue with realism here, where BI programs seem to have little feasibility, unless implemented slowly and piecemeal over time.

All things told, this was an interesting book. BI is a concept that is both interesting and puzzling. It is an initiative supported both by Socialists, and Conservatives, as a way to either improve the welfare state, or deconstruct it (respectively). I personally see the deconstruction of the welfare state as silly; implementing a BI program should not affect the provision of education and healthcare, for example, as a public good. Although BI provisions may be useful to those with lower incomes, they certainly will not allow one to live a comfortable existence, and this means inequalities and lack of public services will still plague those at the lower income brackets. I often see BI schemes as a way to "enserf" (so to speak) a population into a certain wage bracket. With the loss of labour being seen in many Western countries due to automation and the flight of jobs overseas, is this a way to stash the "losers" of this globalized supply chain into lower level wage categories to try and keep them content? Or is this a way to top up the welfare state and ensure one can purchase necessary goods and services for survival? It is certainly popular to tie BI funding in with the shuttering of certain welfare options, like employment insurance, and even pension contribution programs as a cost savings measure. Does giving individuals this amount of cash in hand allow them to more efficiently spend their money? As can be seen, I am still a bit perplexed at how a BI program would look and operate, and many questions and concerns arise about a BI program and its aims. Regardless, this was an interesting read on how some nations are looking to tackle financing BI programs. It is interesting, concise and well sourced, and is worth a read for those interested in BI initiatives.