If there’s ever a place in Europe where sanity occasionally reigns supreme, it’s Switzerland. Swiss voters said “No” this weekend to a proposal which would have guaranteed income for everyone, even if they had a job. Via the BBC.
Final results from Sunday’s referendum showed that nearly 77% opposed the plan, with only 23% backing it.
The proposal had called for adults to be paid an unconditional monthly income, whether they worked or not.
The supporters camp had suggested a monthly income of 2,500 Swiss francs (£1,755; $2,555) for adults and also SFr625 for each child.
Proponents of the proposal had bizarre reasons for supporting writing on BasicIncome2016.org it was important to the “Right to Life” and a basic human right (emphasis original).
A basic income already exists today. Everyone obtains one from somewhere; otherwise we would not be able to live. In our society today, no one can survive without an income. The level of a basic income is currently included in the existing incomes. The shift that is needed now is to make current incomes free of conditions up to the level of this basic economic security. In fact, the introduction of an unconditional basic income does not cost anything. To assure basic security by means of a social contract will bring about a new situation for income of all origins. It opens up the possibility for negotiations at all levels. Principally, the existing incomes could be decreased by the amount of the basic income.
The problem with this is obviously the fact supporters don’t explain HOW unconditional basic income “doesn’t cost anything.” The money is going to have to come from somewhere, and its value is going to have to be determined in some way, shape, or form. It certainly won’t be from the Swiss National Bank, which The Wall Street Journal noted last year pretty much saw its credibility go in the tank.
The SNB’s decision Thursday to scrap its policy of capping the Swiss franc at 1.20 to the euro shocked markets. News that it was also cutting interest rates further into negative territory did little: The franc rocketed, reaching 0.85 to the euro before retracing to 1.0245; Swiss equities fell 9%, and the yield on 10-year Swiss government bonds fell to 0.04% from 0.2% a week earlier…
For investors, the SNB’s reversal raises the risk that central bankers are finding they aren’t as all-powerful as they have been believed to be. Markets have come to rely on central banks to save their bacon. But Thursday’s ructions are likely to have left investors disoriented and potentially nursing large losses that could ripple through markets in unexpected ways.
This is probably one reason why the Swiss rejected the BIG by a whopping 77% because they knew the central bank couldn’t be trusted. If there’s nothing to base the value of a currency than what a central bank suggests, then what’s to stop bankers from deciding whether or not they’ll arbitrarily devalue the currency. This is something the BIG supporters didn’t consider when they wrote their proposal (or didn’t care to consider) because all it’s doing is relying on the government to help. It’s a lot like Mega-City One from Judge Dredd where jobs are scarce, but almost everyone lives on welfare (or a Basic Income Guarantee). The creators of Judge Dredd wrote the welfare caused people to get bored easily and actually increased violence. It’s completely possible this could have happened in Switzerland had the BIG proposal passed.
One thing the BIG supporters did promise is the free market would stay intact. But their explanation leaves a LOT to be desired. Via BasicIncome2016.org:
An entrepreneur can now be sure that people will come to her because they actually want to work with her. Motivation will become a prerequisite for a job application. Even the employee is now more free in his position of negotiation. He can say yes to work that interests him and in which he can be of optimal use. Personal development through our work, having success and taking responsibility will become key attributes of a job search. The applicant can also say no to unappealing job offers more easily. The threat of taking away a person’s livelihood can no longer be used as a means to force employees to work under bad conditions.
The transfer of an unconditional basic income reduces the cost of labor. It acts as a subsidy to the existing wages. Being secured up to the level of the unconditional basic income, each person can now do her work without hesitation.
This is pretty much hogwash, even though there are plenty of people working in job situations they don’t want to be in. But what the BIG supporters fail to point out is everyone DOES have a choice. If someone is unhappy in the job they’re in, they can start looking for other places of employment or start their own business. If there’s no openings in the same industry, then people can decide whether they want to completely switch industries or go back to school to learn new skills. It absolutely could lead to student debt, long workdays, and less free time, but if someone decides to make that choice, it’s their own choice.
A Basic Income Guarantee is actually something which scholars in the U.S. have studied from time to time. CATO Institute actually looked into what a BIG might look like in 2014 when Matt Zwolinski suggested it wasn’t necessarily a bad idea because it could reduce reduce bureaucracy and be a replacement for the current welfare state. Zwolinski called it “pragmatic” because of how the situation currently is.
Maybe the state shouldn’t be in the business of giving out welfare at all. Maybe it shouldn’t be running schools, or highways either. But, as Jacob Levy notes, since it does do these things, libertarians have good reason to demand that it does so in a way that is as “more rather than less compatible with Hayek’s rule of law, with freedom from supervision and surveillance by the bureaucracy, with the ability to get on with living their lives rather than having to waste them proving their innocence.”
The problem with Zwolinski’s thinking, and those of the Swiss BIG, is its heavy reliance on the state and the need to provide “fulfillment now.” It’s tough to be able to push for policies which will take years to accomplish (lowered or no taxes, fewer government laws and regulations, no welfare, repealing gun laws, etc). But it’s still an important fight, especially as the leviathan of government grows and grows on a daily basis. There’s no reason for a government to be the “All-Father” of our lives and decide who gets what and when and I’ve written before how there’s evidence suggesting government intervention actually raises costs. The Swiss realized this in their decision to reject the BIG. Hopefully they’ll be the only nation to have to realize this and the notion of a BIG will stay in philosophical circles and not ballot booths. Although, given how things go, I wouldn’t be surprised to see other countries start considering a BIG in the next ten to 20 years.