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Basic income is not about redistribution of money

Published on 2022-08-06 politics

The discourse around basic income annoys me. People discuss how it could be financed and whether it is a good idea to replace the carefully crafted system of social redistribution. All that is completely beside the point. Basic income is not about the redistribution of money. After introducing basic income, everyone should have mostly the same as before. What it is about is the redistribution of bureaucratic work.

Let me explain:

The system of social redistribution is complex. There are taxes, unemployment benefits, and insurances. Each of them comes with a whole host of custom rules and exceptions. This complexity exists for a good reason, after all social equity is complex. But this complexity also has a downside: It is hard to keep track of all the rules and exceptions. So I might end up getting less than I would theoretically be entitled to.

Rich people can pay expensive tax consultants to get the best deal. But poor people have neither the money for that nor the time and resources to do it themselves. At the same time, they are the ones who are most reliant on this whole system. It follows that a system of social redistribution focused on real equity must be simple for people with little income.

That is exactly what a basic income achieves: For people with very little income, it ensures that they don’t need to be hungry, without having to fill out any forms or applications and without turning over all of their personal data. In other words: The bureaucratic work of applying for unemployment benefits is removed. But the amount of money you are entitled to doesn’t really change.

Of course this is only one (important) building block. Other policies could also be adapted to shift the bureaucratic work up the income curve. To make an example: taxes on income from capital should start very low so ordinary people can save some money for retirement without loosing most of it to inflation. As we get into “let the money work for you” territory, the taxes may get really high, maybe even 80% or 90%. And then there might be specific exceptions to incentivize investment into e.g. renewable energy.

In this system, rich people who are doing some elaborate investment need to do the bureaucratic work and apply for an exception. But poor people don’t have to do that kind of work just to get their basic human rights met. And that is what basic income is about.