A thin layer of basic income for the twenties
KIM Seok-hyeon.
first upoaded: 2020-12-31.
last updated: 2020-12-31.
Nowadays basic income is a buzzword worldwide. Basic income is to provide all the citizens with the same amount of unconditioned income. But the levels of basic income suggested commonly seem to be too high to meet 'basic' needs and so may put a huge burden on taxing. Then why not try a basic income whose total expenditure is small enough to keep taxing little burdened. This is made possible when the level of income is low. But if the income is too low, then the recipients may take it almost as changes, with the effect unappreciated. For example, a 10,000 Korean wons (a little less than ten US dollars) every month for each Korean may be too little to be counted in monthly budget although the size of five trillion wons nationwide (for fifty thousand people) is about one percent of the government budget and so will be taken seriously in budget discussion. So we need to think about the reduction of the size of the beneficiaries while increasing the payout more for each recipient. So we may have to choose a sub-group of the people as a recipient group of the payout. Age may be the best criterion because it is a well-defined natural categorization and has also a role of social stratification in many aspects.
By the way, there are already some instances of payouts universal for a certain age group. In Korea, kids of the ages less than or equal to 7 years old are paid 100,000 wons (a little less than 100 US dollars) for each month. This child allowance was first in place in 2018 for the kids less than or equal to six years old whose family income level belongs to the lower 90 percent, became universal for the age group in the next year, and soon in the same year, has been expanded to the age 7. This child allowance was implemented as a way of giving child-bearing families to help them and incentivize child-bearing amidst a rapid decline of child birth rates. And the basic pension for senior citizens is close to children allowance in its age-specific aspect but it differentiates payouts by means-test. This basic pension was introduced to help senior citizens who are not well prepared for post-retirement.
Then we may ask why not try to give basic income to an age group who are not prepared for living. The age group of the twenties is such a case. Although they are already adults, because of lengthened preparation of career and insufficient career opportunity to their eyes they tend to remain as a poor group struggling to meet their ends and to prepare their human capital. So it is not absurd to help them with as little as one million wons for each year. In Korea, the size of the population of the twenties is about seven million. So the overall annual expenditure amounts to 7 trillion wons (a little less than 10 billion US dollars). This expenditure is not small but about 1.5 percent of the government budget which is about 500 trillion wons this year and so manageable enough by rearranging budget items. For example, there have been temporary wage subsidies whose total annual size is larger than three trillion wons and have been introduced to help the employers to cope with the hike of minimum wages since 2018. And also the budget for unemployment allowances has increased by 4 trillion wons from about 6 to 10 trillion wons since 2018 till 2020, partly due to the economic downturn and partly due to expanded safety net. So the budget about 7 trillion wons can be prepared without an increase of budget or hard adjustment of budget items. Then why not try it at least? If the people may not dislike the item, then they can stop it. The size of payout is obviously helpful for low income twenties but is not large enough to make the twenties a stubborn interest group stuck to it. So this kind of size and limitation to an age group may make the basic income light-handed or nudged.
(*) This article is published in intelligence korea, Summer and Winter, 2020. The Korean version is available at intelligencekor.kr/periodical/article.html?bno=10.
