Macroscope | Guaranteed income for everyone a big idea deserving of careful debate

On June 5, Swiss voters were asked in a referendum whether to introduce a universal basic income for all Swiss. The proposal, backed by more than 100,000 people – a prerequisite for Switzerland’s popular initiative system – was roundly defeated by the electorate, with 77 per cent voting against.

Swiss say ‘no thanks’ to unconditional basic income for all

Under the proposal, every adult would have received a guaranteed and unconditional income. This might have been the first time the idea of universal basic income has been given such a wide airing. But it is not new.

According to an article produced recently by The Economist magazine, the idea was embraced by Thomas Paine as long ago as the late 18th century. In more modern times, it has been explored and experimented with in a number of advanced economies, including Canada, Finland, the Netherlands and even a hi-tech enterprise from Silicon Valley in the United States.

Various versions of universal basic income have been advocated across a wide political spectrum. It is not a pet project limited to left-leaning ideologues and aspiring social engineers. The concept has been supported across the political divide, including on the right.

Is a guaranteed income for every citizen an idea whose time has come? Perhaps not quite yet. It has its problems. But more discussion of options is healthy. It suggests growing concern with what ails market-based economies that concentrate incomes and enjoy rapid technological advances, mostly through digitisation.

Two major, possibly connected, factors appear to be at work in support of universal basic income. These are most relevant to high-income economies, but will doubtlessly figure more prominently elsewhere as incomes grow, growth rates slow and automation takes off.

One factor relates to stagnant wages, accompanied by growing poverty and inequality in most major economies. Since the 2008 financial crisis, most income growth has been enjoyed by a disturbingly small segment of the population. Governments and the Establishment more broadly face a growing legitimacy crisis.

The second relates to a fear that digitisation, robotics and other forms of automation will eliminate jobs without creating enough additional employment to avoid mass joblessness in a not-too-distant future. Some would argue that these fears are exaggerated and at the very least premature.