Mon Oct 6th, 2008 at 03:06:14 PM EST
In this diary I want to discuss some aspects of the basic income, and how I think, it could help the EU.
The (uncondition) basic income is just that. Everybody gets amount X without any strings attached. The main advantages of an EU wide basic income are I see are
- reduction of bureaucracy
- automatic compensation of imbalances in Europe
- high level of subsidiarity and transparency
- high level of individual freedom
- allows higher taxes on environment damaging substances, without harming poor people disproportionatly
The basic income is already longer discussed by various people in various countries. One of the major problems for such a basic income is, that it would have to be applied to all EU citizens inside a country, and due to the open borders, there would be a significant incentive to move to such a country, when you don't make such money in your home country.
This problem of course vanishes, if the basic income is applied on the EU level.
Another problem is not really a problem, that is financing of such a basic income. But as Götz Werner points out, we are already now all living. So everybody already now gets enough to survive, just often with unnecessary strings attached. Usually it is suggested to pay for this with an VAT, which is a reasonable suggestion, and of environmental taxes are often a form of VAT.
Reduction of Bureaucracy
Already now there are in most European countries lots of programs, to pay for those, who don't earn anything or not enough to make it. Much of such bureaucracy, which is often seen as indignifying by those who seek help, can be cancelled completely. But on the European level there is another issue.
Right now solidarity between European countries is negotiated and pursued by regional development payments, science projects, exchange programs...
This negotiations are often totally intransparent for the citizens, strange compromises are made (I think Italy got a higher milk quota in exchange for supporting the Nice-treaty). Such programs could be reduced largely - and thereby the intransparent negotiations - when the solidarity between countries in Europe would be pursued by direct payments to the citizens. While there maybe a couple of EU projects, which are doing great, a lot of such regional development payments are not very efficient - just look on the east German invesment ruins.
Automatic Compensation of Imbalances in Europe
When the Euro was introduced, a lot of economists worried about asymmetic shocks in the Euro area, which would usually lead to devalueing regional currencies. The bureaucratic EU can not at all or only very slowly compensate the lack of monetary policy answers in such a case with a fiscal answer. The basic income would have an immediate stabilising effect, as the people living in the country where the shock hits, still would get their payments, but would contribute less taxes into the pool. Maybe the EU doesn't need a basic income, but some form of stabilisation cross-country should be implemented - why not the basic income.
High Level of Subsidiarity and Transparency
As the basic income provides for things otherwise each country would have to do on its own, with a basic income poorer countries have more possibilities to define what they want to do with the help they get. I think this will lead to higher efficiency.
The greater fiscal leeway of the poorer countries stems from their possibility to tax their own people and use this money not for basic needs, as currently.
It would be clear, what the EU provides for everybody, and the amount of solidarity would be determined by a single number, the height of the basic income, instead of negotiated in opaque EU institutions.
High Level of Individual Freedom
That is actually the main reason to introduce a basic income. As it is only a basic income, most people will try to get extra income from work or other sources, but if you really have a 'mission', be it to care for your elderly and dement parents or your children, perform art, that doesn't make enough money, study, engage in free software or providing a blog, then you may go that way without regard for the need to earn your dayly bread.
If you love the environment and the freedom of humans, your choice of protecting the environment will usually be taxation of behaviour, that damages the environment. E.g. energy taxes are such a kind of tax, but as often noted, it hits disproportionaly poor people, who use a higher share of their income for energy.
If the revenue of energy taxes are added to the pool for the basic income, all people who use less than the average person, will profit in absolute terms from environmental taxes, and those who use more than the average will be punished.
Paul Krugman often tells the anecdote of an congressman, whom was told on a campaign trip, don't let the gov't interfere with social security. While people in the US don't trust their gov't, they do trust the transparent, stable, and more or less fair mechanism provided by social security. The basic income is similar transparent and out of the hands of back room politics.