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Sunday, June 26, 2022

A basic income

It may be an idea whose time has not yet come. But even as it is voted down by the Swiss, it sparks a debate.

By: Express News Service |
Updated: June 7, 2016 12:02:01 am
money The idea behind providing a basic income is to ensure that everyone has the wherewithal to enjoy a “basic” standard of living.

In the first vote of its kind, Swiss voters have rejected the proposal to introduce a guaranteed basic income for everyone living in the country, irrespective of employment status or social contribution. The idea behind providing a basic income is to ensure that everyone has the wherewithal to enjoy a “basic” standard of living. In Switzerland’s case, this came to a monthly income of 2,500 Swiss francs (or $2,555) for each adult and 625 Swiss francs for every child. There are two broad reasons why this idea, which has often been run down as bizarre, has gathered momentum to reach the stage of a national vote in a well-off European country. One, the growing disenchantment with inefficient welfare delivery systems of governments across the board. Two, rapid technological change has led to growing apprehensions about the labour market.

Paradoxically, the idea has often found support both from the ideological Left as well as the Right. For several Left-wingers, a basic income is a means to provide equal opportunity and counter exploitation, while for many Right-wingers it is a way out of the ever-expanding bureaucratic maze. On the face of it, Switzerland appears to be among the countries that are financially strong enough to follow through on such an onerous commitment. Yet, the proposal lost — 77 per cent opposed it — primarily due to their cost. The Swiss government opposed it because the proposal would have reportedly cost three times the current annual government spending. Moreover, the unemployment rates are relatively low in Switzerland. There is another problem that renders the basic income idea impractical: Funding it would require raising tax rates to levels that are not politically feasible. For instance, according to a UK study by Joseph Rowntree Foundation, direct tax rates might have to be 50 per cent. Add to that the implausibility of taking away existing schemes especially those related to old-age healthcare etc.

However, even in defeat, the vote has provided food for thought. Governments, national and local, in countries such as Brazil, Finland, as well as India have been trying to implement direct cash transfers. From India’s perspective, the vote shows that irrespective of capability — and India has been pushing hard to ensure that the enabling conditions exist — there exists a question of the desirability of such a policy tool in the real world. It allows people to look at reforming existing welfare schemes with renewed vigour.

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