Have Your Say:

Basic Income Grant

The ‘Have Your Say’ page is intended to give you an opportunity to express support for or opposition to various issues of the time.

Is a Basic Income Grant (BIG) a social welfare payment or an investment in an economy?
  • Add your answer

Typically governments will pump huge sums of money into the supply side of an ailing economy in the hope and expectation that the money will enable further production and boost the GDP and wealth in the form of additional employment and wages which will trickle down to the demand side of the economy and thus take up the additional production of the supply side of an economy.

The fallacy of that argument is that if you do not at the same time, enable the demand side to consume and pay for the additional production, the economy will not be stimulated at all and typically, savings garnered from stimulating the supply side are hoarded by the supply side and/or invested in mechanisation rather than employment and wages (the mechanism of the trickle down theory) so an economy often remains stagnant.

Some argue that by providing cheap credit you stimulate the demand side of an economy. This often results in a credit bubble which eventually bursts as bubbles tend to do, because there still is not enough additional employment and wages from which the credit advanced can eventually be paid for. The only effect, very often, is that the rich (the supply side) merely become richer and the poor become poorer, relatively speaking. That is just the bare bones of the argument.

It is becoming more fashionable to realise that the Law of Markets (aka Say's Law or the law of the trickle down effect) does not work as claimed, and that if you want to stimulate an economy, you give money to the people who can and will spend it, viz give money to the demand side of the economy. This will stimulate demand for goods and services and thus motivate the supply side to increase production and availability of goods and services. From this, all benefit, both the demand side and the supply side of an economy. In effect you could think of stimulation of the demand side of an economy as a river of wealth that flows, indeed rushes, upwards, rather than trickling downwards.

While there are also many social benefits deriving from a BIG, along with some accompanying risks and failings, the DDF believe that the economic benefits from investing in the demand side of an economy far outweigh any possible failings. So the DDF see a basic income grant as an investment specifically in the demand side of an economy but more generally in the economy as a whole, with widespread advantages to the entire economy and all of society, rather than a social welfare payment which merely serves to keep the wolf from the door of poorer households.

Will a Basic Income Grant (BIG) make people lazy?

There seem to be two basic positions.

One group, usually fairly well off and employed, argue that a BIG will make people lazy and nobody will want to work. The other group see a BIG as an empowering tool which will enable beneficiaries to do more with their lives than they could do without a BIG. The DDF are firmly in the latter camp. Yes, some will be satisfied with their BIG as their sole means of income and may do little of value with their grants, but those folk will probably do little with their lives whatever their circumstances. The DDF believe the latter folk will be very much in the minority.

When asked, if they received BIG would they give up their jobs, most folk say no, they would not give up their jobs but, many add, others would simply stop working. Where the logic is to that we have no idea.

A BIG is giving people money for nothing. People must be made to earn their money.
  • Add your answer

It is a quite common response to a proposed BIG that people should be made to earn their money. Again, the response is typical of the employed elite who do not realise how lucky they are to be employed at all and fail to see that a BIG will benefit individuals and entire communities.

The DDF firmly believe that a BIG will enable recipients to become employed in their own communities and in the larger economy and this will have positive ripple effects for all of society.

Will a BIG make for a better and happier society?

The number of positive ways that a BIG is likely to effect society are almost innumerable.

It will enable people to get medical treatment when they need it if it is linked to a National Health Insurance scheme,
It will help relieve financial pressure on those living on the edge of society.
It will enable people to make choices about what to do with their lives.
It will enable people to better their lives.
It will empower the un-empowered and the poverty stricken
It will make independents of dependants.

The list is almost endless.

The DDF believe that a BIG will make for a better and happier society.

Next – Taxation