Until stumbling across a post referencing it at Fred Wilson’s AVC I’d never heard of “basic income guarantee.” So what is it exactly? From Wikipedia:
An unconditional basic income (also called basic income, basic income guarantee, universal basic income, universal demogrant, or citizen’s income) is a proposed system of social security in which all citizens or residents of a country regularly receive an unconditional sum of money, either from a government or some other public institution, in addition to any income received from elsewhere.
A basic income is typically intended to be only enough for a person to survive on, so as to encourage people to engage in economic activity. A basic income of any amount less than the social minimum is sometimes referred to as a ‘partial basic income’. On the other hand, it should be high enough so as to facilitate any socially useful activity someone could not afford to engage in if dependent on working for money to earn a living.
Interesting concept, but this quote from Wilson’s post echoes my initial reaction:
I don’t have a formed opinion on this idea. I know that welfare didn’t work out too well in the last century. So I’m nervous about any system that encourages or incents people not to work. But if we really are headed into a world where there aren’t any low skilled jobs, then I guess we need to be talking about ideas like this.
One of Wilson’s colleagues has been writing about the concept and has a couple of posts that explore how this all might work. You can read them here, but this excerpt highlights why this might be a concept worth exploring:
A higher minimum wage, as vigorously argued for in an interesting recent piece on Politico, can inject some short term liquidity into the economy and I am sympathetic to that but it is also a very blunt instrument and still doesn’t help with the many unpriced activities. The same goes for government mandated shorter working hours or longer vacations (although I am pretty sure that Google’s founders did not have a government mandate in mind)…
This brings me once again to the idea of a guaranteed basic income. This is a potentially attractive alternative for a number of reasons:
First, it sets human creativity free to work on whatever comes to mind. For many people that could be making music or learning something new or doing research.
Second, it does not suppress the market mechanism. Innovative new products and services can continue to emerge. Much of that can be artisanal products or high touch services (not just new technology).
Third, it will allow crowdfunding to expand massively in scale and simultaneously permit much smaller federal, state and local government (they still have a role — I am not a libertarian and believe that market failures are real and some regulation and enforcement are needed, eg sewage, police).
Fourth, it will force us to more rapidly automate dangerous and unpleasant jobs. Many of these are currently held by people who would much rather engage in one of the activities from above.
Fifth, in a world of technological deflation, a basic income could be deflationary instead of inflationary. How? Because it could increase the amount of time that is volunteered.