Battling Eight Giants with Basic Income
The post-1945 income distribution system is irretrievably broken, threatening the market economy. And traditional redistributive tools such as direct taxes, collective bargaining, and labor regulations cannot put things right.
LONDON – In 1942, William Beveridge issued an epoch-defining report that established a model for welfare states in the post-war era. He recognized that the old social protection system had broken down and that it was “time for revolutions, not for patching.” The challenge, Beveridge said, was to slay five giants: disease, idleness, ignorance, squalor, and want.
Today, it is the post-1945 income distribution system that has broken down irretrievably, threatening economic failure and jeopardizing what Klaus Schwab calls “Globalization 4.0.” Today we must fight eight new giants. To do so, we urgently need a twenty-first-century income distribution system in which a basic income plays a central role. Such a system might not slay today’s eight giants, but it would significantly weaken them.
The first giant is inequality – the huge growth in income and wealth disparities within countries that goes well beyond what is captured by measures such as the Gini coefficient. An increasing share of total income is being captured as rent by owners of physical, financial, and so-called intellectual property. Meanwhile, real wages have stagnated or fallen, and ever more people are falling through widening holes in the social safety net. Traditional redistributive tools such as direct taxes, collective bargaining, and labor regulations cannot reverse these structural shifts, however much those on the left might wish.