Notes on Basic Income, Meaningful Work and Equilibrium

Recently, Andrew Walker at BBC News (HT Lars Christensen) noted some details about the basic income approach, as it is currently being debated in the UK. This dialogue is commendable, in that it seeks solutions on a number of levels. What I find useful are the attempts to strip away some of the legal complexities, which make it difficult to sort through welfare costs and obligations.

Even so, while basic income might simplify overly complex systems, real barriers remain. Policy makers are trying to find ways to integrate the marginalized, in the already existing consumption expectations of general equilibrium. Or, one way to frame the issue is this: how does one "fit" small wages into the high wage expectations of today's prosperous non tradable sectors? For the UK, these obligations overlap in at least three areas: housing costs, insurance and taxation. Tim Blackwell of the New Statesmen, considers what might happen to someone dependent on a basic income:

...the combined effect of tax, national insurance and the withdrawal of housing benefit and council tax support was to leave the individual with just over 10% of any additional income they might earn.

Equilibrium variance in terms of income, is why I've suggested that local corporations take on the task of sorting local wage and income structure away from the expectations of state and nationally defined economic equilibrium. It is not always easy for anyone with small wages, to participate in the non tradable sectors which provide much of today's wealth for both governments and private interests.

As to another consideration regarding the above link, there is good news in the form of a recent Gallup poll. First, from closing comments in the above article:

Some argue that if there is a guaranteed basic income, some people will choose not to work. For many the idea of simply giving people cash is very unpalatable.

 Here's what Gallup recently found (HT Sarah Gustafson at AEI):

What the whole world wants is a good job. This is one of the most important discoveries Gallup has ever made...Our World Poll across 160 countries found that over the past 100 years the great global dream has changed from wanting peace, freedom and family to simply wanting to have a good job.

 Gallup's research has found that of the 7 billion people on earth, 3.2 billion are adults who dream of having a good job. That is what they want more than anything in life. We define a good job as 30+ hours a week for a paycheck. The problem is that when our World Poll asks how many people have a "good job" as defined this way, only 1.3 billion do. So the world is currently short about 1.9 billion real jobs, or what we would call "good jobs".

One thing to consider, is that those "good jobs" have been generated on asymmetric terms. In other words, secondary funding channels for knowledge use (through asset formation and traditional manufacture) are not a monetary flow result which is capable of full integration. One only need look at remaining pockets of either poverty or inadequate service formation in developed nations, to see how this has been the case - time and again. Symmetric compensation - in the form of knowledge use systems through local corporations, could go a long way to fill the gaps.

However, these local systems would alleviate what would necessarily be small wages, through alternative equilibrium structures. By separating the requirements of local non tradable sector activity from primary or general equilibrium, local populations could generate vastly reduced internal costs, for both time based product and local housing/infrastructure needs. What would have been taxation for infrastructure and services needs, becomes local group investment and time based coordination strategies. Hence primary connections to surrounding economies, would be through the (already existing) frameworks of tradable sectors.

Whether or not governments are able to bridge the needs of the marginalized (through basic income) with those of general equilibrium, remains to be seen. What is interesting in this regard, is that common ground is being forged between different factions - some of which are presently concerned about a lack of meaningful work, versus those who would like to be rid of unnecessary legalities and complexities in a time of strained budgets. Tight budgets make it difficult to recreate the kind of "good jobs" that so many believe to be necessary for a good life. Even so, real innovation in non tradable sectors can still bring a good life and meaningful work, to small wages and small incomes.