As Labour Day rolls around this year, the holiday will make little difference to the many Hungarians who have been laid off or are working from home. But it does provide an opportunity to continue the discussion about how exactly we plan on recovering from this virus and the accompanying economic shutdown. Labour Day has its foundations in the Haymarket riot, a Chicago protest for an eight-hour workday that suddenly turned violent. Thankfully, the eight-hour workday has now become generally accepted, although many will say that labour rights as far as they should have in the 134 years since this event. A labour related topic that has recently gained a lot of traction is Basic Income. This idea has been around for a long time, but the coronavirus situation has significantly boosted its popularity. Let’s take a look at what exactly basic income means, and what some of the pros and cons of its implementation may look like.
The “basic” premise of basic income, is that it is a system of welfare where individuals are paid a guaranteed sum of money by the government every month. A universal basic income would mean that everyone gets it automatically, and it is the same amount for all individuals. There are, however, variations of this concept that change some parts of the idea. For example, a negative income tax has the amount received as a negative function of income. As income increases, the amount of money received decreases, making it no longer universal.
There are many arguments both for and against basic income. An important argument is that basic income would be much more simple than existing forms of governmental welfare that are often complicated and difficult for citizens to understand and fully use. The fact that basic income would apply to everyone automatically would remove the bureaucracy from the process. Another argument is that basic income provides an excellent solution for many existing inequalities in society. Basic income would greatly benefit many individuals belonging to disadvantaged groups, allowing them to bridge a gap that they are often born into. For example, the majority of unpaid domestic labour is still done by women, basic income would recognize the work they do in the home that has no “traditional” market value. Regarding Hungary, this would jive quite well with Fidesz’s pro-natal policy, as a basic income would give mothers the financial freedom to take care of their children full time. Another argument for basic income is that it would counter the effect of job loss due to automation, paving the wave for a post-capitalist society where wage-labour is no longer taken as given. Finally, regarding the current economic crisis, basic income would provide an injection of liquidity into the economy that would get it back on track. An endemic problem of recessions is that they reduce the income of consumers, making it difficult to start the ball rolling again.
Is this possible, though, or just a pipe dream? Well, a few years ago, most political analysts would probably have hinted towards the latter. Other than a few small pilot projects in recent decades, basic income was far from widespread acceptance. Recently, however, especially with the coronavirus situation, basic income proposals have experienced a surge in support. Many wealthy individuals, such as Tesla CEO Elon Musk and Facebook founder Mark Zuckerberg, have expressed support for the idea, and just recently Andrew Yang ran for the Democratic presidential nomination in the United States on a program of a $1,000 universal basic income. More than half of European Union citizens support the idea of a basic income as well.
There are many, though, that warn against basic income being some sort of magic bullet for solving welfare issues around the world. The money does have to come from somewhere, and countries may not be able to sustain the massive amount of welfare spending required for such a project. There are also unintended economic effects that will most likely accompany basic income, such as an increase in commodity prices. This would be similar to the increase in Hungarian real estate prices that can partially be attributed to the funding that the Hungarian government has made available through its pro-natal programs. The counterargument here is that while a basic income would increase commodity prices somewhat, the increased purchasing power of poorer individuals would outweigh the increase in prices. You also have the claim that basic income will make people lazy, since they can now work less to make ends meet. The response to this is that the added income will instead allow individuals to pursue further education, hobbies, arts, etc. that they would otherwise be unable to afford. Then, there is the equality vs. equity debate on the universal nature of basic income. More specifically: why should money be given to those who already make more than enough?
It is clear that with the global economy pushed to its limit, innovative solutions are necessary, not only to fix pre-existing problems, but to address the long-term consequences of the lockdown. Basic income has its respective benefits and drawbacks, but it must be a part of the conversation about how we plan on starting the economic recovery.
Featured photo illustration by MTI/EPA/Neil Hall