[Asia Approach] From Youth to Farmers, Now to the Entire Nation... Basic Income Debate

Governor Kim Kyung-soo of Gyeongnam (left) and Governor Lee Jae-myung of Gyeonggi, who sparked the debate on disaster basic income

[Asia Economy, Lee Kyungho, Head of Editorial Planning Team] Kim Kyung-soo, Governor of Gyeongnam Province, proposed at a press conference on the 8th that a disaster basic income of 1 million KRW per person be paid to all citizens as a measure to revive the economy, which has been stagnated due to the novel coronavirus infection (COVID-19). The required budget for this is approximately 51 trillion KRW. If the amount is halved to 500,000 KRW, 26 trillion KRW would be needed.

Governor Kim, based on 500,000 KRW (totaling 26 trillion KRW), stated, "According to economic experts, investing 51 trillion KRW as disaster basic income is estimated to increase tax revenue by 8 to 9 trillion KRW through economic revitalization. Furthermore, depending on how much of the basic income paid to high-income earners is recovered through taxes next year, the government's fiscal burden can be significantly alleviated." He added that even if 1 million KRW per person is paid, by reducing the fiscal burden by nearly half through such methods, it would be possible to implement nationwide disaster basic income at a cost less than the Four Major Rivers Project budget.

Governor Kim advocated for the introduction of disaster basic income because he judged that if things continue as they are, the economy, which has been sustained by exports, will be shaken, and if domestic demand also collapses, it will lead to a vicious cycle of job losses, income reduction, and domestic demand stagnation, necessitating drastic measures.

Lee Jae-myung, Governor of Gyeonggi Province, expressed full agreement with Governor Kim's opinion on Facebook, saying, "In the era of the Fourth Industrial Revolution, where jobs are disappearing en masse, and in an era where there is more money to invest than places to invest, making low growth the norm, the only policy that can revive economic flow and guarantee sustainable growth is 'basic income.' I support Governor Kim Kyung-soo's 1 million KRW disaster basic income and will join in opening the path to nationwide basic income together."

Kim Kyung-soo Proposes "Disaster Basic Income for All Citizens"
Lee Jae-myung Agrees, Political Circles Join to Publicize

Basic income, simply put, is a system where the state pays the same amount to all citizens regardless of income level to maintain a minimum stable life. With the advent of the Fourth Industrial Revolution and growing concerns about mass unemployment, it has spread worldwide since the mid-2010s. Many countries and local governments have institutionally or experimentally pursued the introduction of basic income systems, and discussions have also taken place domestically. Disaster basic income retains the framework of basic income but is introduced to prepare for disasters caused by COVID-19. Disaster basic income became known after Lee Jae-ong, CEO of Socar, posted a proposal on Facebook on the 29th of last month and a national petition began on March 1st.

Lee said, "If you don't like the name 'disaster basic income,' 'emergency national livelihood support fund' is fine. Giving 500,000 KRW to 10 million people is 5 trillion KRW. People who have lost income need at least 500,000 KRW a month to buy masks, eat, or pay rent. Even if it's 5 trillion KRW out of the 20 trillion KRW supplementary budget, it should be used for people on the edge. We should focus on people and income, not on companies, landlords, tax cuts, or jobs. People must endure for companies and the economy to endure." As of the 10th, over 6,000 people have agreed to the petition that started on the 1st.

Previously, Governor Lee Jae-myung introduced the Youth Dividend system, which can be considered a preliminary stage of basic income, during his tenure as mayor of Seongnam. As governor of Gyeonggi Province, he also pledged basic income as a campaign promise. He envisions basic income as essential policy beyond universal welfare in a society of mass unemployment and plans to secure funding by introducing a national land holding tax.

Ahead of the basic income bill to be held in Switzerland in 2016, the campaign decorating the streets asks, "What would you do if your income were protected?"

Basic Income Emerges as a Supplement to Mass Job Destruction
Experimented in Finland, Rejected in Swiss Referendum

Basic income, simply put, is a system where the state pays the same amount to all citizens regardless of income level to maintain a minimum stable life. Experiments were conducted in Namibia in 2008 and in India in 2011, and with growing concerns about mass unemployment in the era of the Fourth Industrial Revolution, it has spread worldwide since the mid-2010s. Many countries and local governments, including Finland, Canada, the Netherlands, Spain, Scotland, Kenya, and Alaska in the United States, have institutionally or experimentally pursued the introduction of basic income systems. Domestically, disaster basic income has recently emerged, but depending on political circles and regional or class interests, proposals such as youth basic income and farmer basic income have been raised, and even a political party called the Basic Income Party has appeared.

The spark for public discussion on basic income was the Swiss referendum and the Finnish experiment, but evaluations are mixed. The basic income bill in Switzerland, held in June 2016, proposed guaranteeing 2,500 Swiss francs (approximately 3 million KRW) per month unconditionally to all adults and 670,000 KRW to children and adolescents. The purpose was to guarantee an income that maintains a minimum living standard in Switzerland, which has the highest cost of living worldwide. However, in the referendum held on June 5 of that year, with a 46.3% voter turnout, 23.1% voted in favor and 76.7% opposed, resulting in rejection.

Proponents argued that unconditional basic income would satisfy the minimum human needs and improve quality of life, preparing for a future society without jobs. Opponents argued that to secure the enormous funds required, taxes would have to be increased, which would raise prices again and lead to cuts in welfare spending.

Finland conducted a basic income experiment from January 1, 2017, to December 31, 2018, for two years on a trial basis. The recipients were not all citizens but 2,000 unemployed people aged 25 to 58 receiving labor market subsidies or unemployment benefits, who were paid 560 euros (approximately 710,000 KRW) per month. Recipients could receive basic income even if they found a job. It was expected that guaranteed basic income would encourage job seeking or entrepreneurship, but the experiment showed little improvement in employment. The experiment ended. While some criticized Finland's basic income experiment as a failure, others argued it was meaningful as an experiment to make social security systems more efficient.

The Basic Income Party pledges to provide 600,000 won monthly to all citizens.

Support for Disaster Basic Income Grows... Populism and Effectiveness Debates
Conservative Camp Proposes Safe Income System Giving 20 Million KRW to Those Earning Less Than 50 Million KRW

Basic income has mainly been a key agenda of the progressive camp, but the conservative camp has also considered similar ideas. During the 2017 presidential election, conservative groups proposed the safe income system as an alternative to basic income, which gives the same amount to all citizens. The safe income system, proposed by Park Ki-sung, professor of economics at Sungshin Women's University, at a forum hosted by the Barun Society Citizens' Meeting in 2017, guarantees 20 million KRW annually to all four-person households with an annual income below 50 million KRW. Households with no income receive 20 million KRW, while those with earned or business income receive an additional 60% of 20 million KRW, i.e., 6 million KRW, totaling 26 million KRW. Since basic income does not reduce income disparity or improve employment, the safe income system aims to increase labor supply in vulnerable households by providing strong work incentives.

Since evaluations of basic income systems, including those in regions where experiments have been conducted, are mixed, careful discussion is needed for domestic introduction. Given the expected severe economic impact of COVID-19, if the ruling and opposition parties, government, and Blue House form a sufficient consensus on disaster basic income, it may be necessary to discuss experimenting with either basic income or safe income systems in a limited, time-bound manner, targeting certain regions, classes, or generations.