They could really use something like this.
Leading economists promote guaranteed minimum income
Inequalities are increasing globally. Millions of people work for an income that does not provide them with a living, and welfare states and trade unions are under pressure. A basic wage that increases in line with economic progress can reverse this development, according to two leading economists.
A guaranteed minimum income such as the citizen's wage provides security for all. Might it be possible to design schemes in such a way that they also lead to positive economic and social development?
The issue is a topical one. The citizen's wage is hotly debated in both rich and poor countries. Last year, Switzerland held a referendum on the introduction of the citizen's wage, and Finland plans systematic experiments this year. India is also cautiously testing versions of the scheme.
The debate has supporters and opponents at both ends of the political spectrum. Some wish to dispose of cumbersome welfare state schemes; others believe that there is a greater need for resources to be used for other purposes, such as health and education. While yet others want temporary support schemes that are phased out with increased national wealth, some argue that only wealthy countries can afford a citizen's wage.
Development bonus in all countries
'Experience worldwide indicates a pressing need for new and simpler methods of income distribution,' says Kalle Moene, director of ESOP – the Centre for the Study of Equality, Social Organization and Performance at the University of Oslo, and his Indian-American colleague, Debraj Ray, who is affiliated to the Centre.
The two economists argue for a different alternative – guaranteed minimum income as a development bonus:
'We propose a minimum income for everyone as a fixed proportion of gross national income – Universal Basic Share (UBS). The scheme can thereby be introduced in all countries, poor as well as wealthy. It would function in India equally well as in Norway.'
They point out that UBS can also stand for Universal Basic Services and in Norwegian the same acronym is used for Development Bonus. No contradiction exists between these.
in the form of cash payments can act as a stimulus to UBS in services. This type of development bonus can boost support for the welfare state. It provides strong incentives for further growth, equality and efficiency, as well as for consensus and social cohesion,' Moene emphasizes.
Debraj Ray is considered to be one of the world's foremost economic theorists and development economists. He was awarded an honorary doctorate by the University during its bicentennial year in 2011. A few weeks ago he visited Oslo.
'In India there is an ongoing political debate about introducing a basic income for all. This is interesting, because India is a poor country. How can India afford something like this? It is worth noting that the Indian government already hands out huge sums in inefficient subsidies. Now many people are advocating for the state to use these resources more effectively by giving the money directly to citizens. However, this gives rise to a new problem, namely that the payments are diluted by inflation.'
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