[Opinion] What Exactly Is Universal Basic Income?

Professor Kim Hong-beom, Department of Economics, Gyeongsang National University

A heated debate is underway among potential presidential candidates over the basic income theory proposed by a certain conservative politician. Other candidates, aiming to highlight their differences from basic income, are also busy preparing alternatives. To properly understand this political debate, a fundamental understanding of 'universal basic income' seems necessary.

Basic income is defined as "a fixed cash payment regularly and automatically provided by the government to every individual without any eligibility criteria or conditions." It is truly universal because it does not discriminate based on income (or wealth), employment status, willingness to work, marital status, or household size.

The American thinker T. Paine viewed the Earth as "the common property of mankind" in his 1797 work, "Agrarian Justice." This is the reason why the right to receive income from common property belongs to all global citizens. In fact, he proposed several ideas, including a fixed allowance paid by the government to adult citizens. According to historical records, this is considered the origin of the basic income theory.

Support for basic income is found among both conservatives and progressives, but their motivations differ. Both emphasize poverty reduction and inequality improvement, but conservatives focus on efficiency, while progressives emphasize fairness. Conservative basic income proposals generally assume the abolition of existing welfare programs. About 60 years ago, free-market advocate M. Friedman emphasized that "helping a poor person is not because they are a farmer, but because they are poor," advocating for a negative income tax, which is less universal than basic income. This proposal aims to significantly simplify the overly complex existing welfare system, which involves various eligibility criteria and administrative procedures, thereby reducing government discretion and improving efficiency.

On the other hand, progressive basic income is a means to achieve fairness (social justice). For example, Professor P. Van Parijs of Louvain University believes that basic income is ideal for approaching the "ideal" of providing the greatest possible real opportunity to those who have almost none of the means necessary for desired actions.

However, the actual implementation of basic income is no easy task. The results of a 2017 simulation conducted by the Organisation for Economic Co-operation and Development (OECD) on four European countries including the UK and France illustrate this well. According to the OECD, "significant increases in tax revenue are necessary to finance a meaningful level of basic income." Therefore, "tax reform is a core part of budget-neutral basic income proposals." Additionally, the introduction of basic income results in varied winners and losers across different social classes and household types. In particular, low-income groups who relied on existing welfare benefits are likely to become losers.

In recent years, South Korea's households, businesses, and government sectors have all experienced a rapid increase in debt. This is fundamentally a disastrous outcome caused by the government's failures in income-led growth and real estate policies. Despite repeated failures, the government has been more focused on "handouts" rather than policy improvements, pushing households and businesses into borrowing. Under these circumstances, it is hard to view the recently rising basic income theory as anything other than a handout proposal. It emphasizes only the unconditional cash payment aspect of basic income, with no discussion on reforming existing welfare or on potential winners and losers. This reminds one of the Roman poet Juvenal’s satire about "bread and circuses," a political strategy to appease the masses nearly 1900 years ago.

Kim Hong-beom, Professor of Economics, Gyeongsang National University