Welcome to Basic Income 101
Yes, free money. But, not without some strings.
Allow me to introduce the maturing concept of basic income, including a solid explanation of why you should give a shit, for those who don’t follow international fiscal policy on a regular basis because your university major requires you to (aka me).
Man, economics is a time.
What is it?
Basic income is implemented to replace welfare systems. The government of the country instating the policy will grant a monthly stipend of roughly $2000 to anyone making below a certain yearly income. The goal of a basic income system is to raise the income of the unemployed and lower-salary-earning population. This is meant to thereby grant these people access to more economic opportunities, such as investments. The goal is that by placing a higher volume monetary flow amongst the unemployed, it will inspire incentive for things such as education. There is no income tax on basic income.
But, if I’m just getting free money without working, why would I want to do literally anything?
One word. INCENTIVE. The human capital of a nation is its skills, knowledge, and experience. Higher developed countries have massively higher human capital than undeveloped or developing countries. The only way to raise human capital is through education. The only way that someone who was laid off from a factory due to machinery development within the industry to get another job is education. Basic income –> education –> better job = MORE money, eventually.
Basically, the government is like “whoops, we installed a bunch of machines to do human jobs and now everyone’s unemployed and can’t get new jobs because they were factory workers with (often) only a high school GED or less, so since we screwed them, we should probably give them some money to learn some new skills.” Thereby, raising the human capital of the entire nation.
Why should you give a fuck?
Highly developed countries such as Canada, the US, Switzerland, and Finland have recently gone through a “second machine age”. This time of technological development has led to outstanding gains for firms and businesses, but could potentially cause high volume lay-offs. As with the first industrial revolution, technological innovation allows factories to replace human bodies with machinery that can do their same job, for less money, faster.
This high mass of potential unemployment is the reason why some countries are attempting to install basic income programs. Switzerland held a referendum in early 2016 about implementing basic income (giving everyone the equivalent of $2250 US dollars per month). The referendum did not pass (70% against versus 30% for), by popular community vote.
So, free money… no employment requirement…
This is some weird European-bank-only thing, right? No.
This could never ACTUALLY happen, right? Clearly, it can.
OH, this is because of Brexit, right? No.
Is this even really legal? Yes.
Can this directly effect me? YES.
Seriously, hang with me…
Canada, our neighbor to the north, is considering implementing a basic income policy trial period in some small communities in Ontario.
Yes, this is legitimately happening right now.
Canada has proposed a basic income of at least $1300 Canadian dollars, and will begin instating the new policy in the new year. The policy outlines guidelines for yearly income. A single person will collect $17,000 per year, as compared to a two parent family with two children, who will collect $34,000 annually.
What does the opposition think?
Well, it depends where the money comes from: directly from tax-payer dollars versus, for example, an increase in government bond sales to the public. The latter would just increase the money flow in the nation. Basically, those who oppose basic income understand that there’s going to be some system in place, whether its welfare or basic income. But, to be frank, many don’t believe such a system would, or could, do well in the Western world.
What do YOU think?
We can only wait and see what happens in Canada, but keep the buzzword ‘basic income’ in the back of your mind. I promise, you’ll sound like you follow current events and semi-understand fiscal policy at the same time. Those estranged family members you only see around the holidays will be so impressed.