[The Editors' Verdict] What Is Income?

I mentioned that I am writing a book titled "Income," and an acquaintance laughed. Their expression seemed to say, "Why write a book on such an obvious topic?" Indeed, someone in every household almost daily works and worries about income. Income is earned in forms such as wages, profits, interest, dividends, and capital gains. Those with low income ponder how to earn more, while many plan how to use it. In that sense, income is part of daily life and the foundation of living.

Because income exists so close to our lives, if asked what income is, most people would probably just smile. However, income is not that simple. In the era when primitive humans lived by hunting and gathering, there was no proper way to store food, so the fruits of hunting and gathering were likely consumed immediately and not much different from consumption. Since income and consumption were not separated, there was probably no need to understand income as a concept of circulation as in modern economies.

Although the exact reason is still unknown, about 10,000 years ago, hunter-gatherers in various parts of the world independently began farming. Over 3,000 to 5,000 years, most hunter-gatherers in the Near East, China, Southeast Asia, Central America, and South America became farmers entirely dependent on agriculture. The beginning of settlement and farming is considered one of the most important events in human prehistory and history.

Although debates about pros and cons continue, the start of agriculture was the starting point for the evolution of human living standards. With settlement and farming, income began to have a completely different meaning than in the hunting and gathering era. Surpluses in production emerged with agriculture, leading to the differentiation of classes and occupations. In human history, income likely became a daily concern when agriculture became the main occupation for most people and separated from consumption.

Specialization and division of labor became everyday matters, and the circulation of the economy became the core of maintaining and increasing income and improving living standards. As Adam Smith early on advocated, someone produces something necessary for my life, and I produce goods and services for someone else. These activities combine to form our lives and the economy. We live in an era where income cannot be considered without economic circulation. In that sense, events and triggers that stop economic circulation cause crises.

Currently, due to the novel coronavirus infection (COVID-19), the global economy has come to a halt. As circulation stops, the world's value chains have also stopped. It is a crisis. In the name of solving this, many countries worldwide, including the United States, are preparing disaster basic income. We are no exception. Moreover, since it is election season, the political consensus is to provide disaster basic income to all citizens. Politicians seem unaware of what they are saying. Populism is rampant.

What meaning does a disaster basic income of 500,000 won have for Lee Jae-yong, Chung Eui-sun, or Choi Tae-won? If they receive an additional 500,000 won in income, will the national economic circulation recover to pre-COVID-19 levels? Now is the time to use the budget wisely. Providing disaster basic income to all citizens is foolish waste. Those citizens who have the capacity to endure until income circulation recovers should not be shaken. Now is the time to prevent the collapse of small and medium-sized enterprises and self-employed businesses. Also, support for low-income groups who face unemployment or suffering due to the halt in economic circulation must be greatly expanded. We must keep in mind that no one knows how much more fiscal spending will be needed until normal circulation is restored.

Jang-ok Cho, Professor of Economics, Sogang University

This content was produced with the assistance of AI translation services.