[Takryu Cheongron] Basic Income, a Distant Future Story... Still a Labor Income Society

Professor Kim Yong-ha, Department of IT Financial Management, Soonchunhyang University

Recently, debates over basic income have been heating up, but it remains unclear exactly what kind of basic income is being discussed. Basic income spans a wide spectrum, from Switzerland's 2016 referendum proposal to pay every citizen 2,500 Swiss francs monthly, to Finland's experiment with unconditional unemployment benefits for some long-term unemployed individuals. In South Korea, some local governments refer to limited social allowance systems such as youth or farmer basic income as basic income. While it is free for individuals to adopt the almost mirage-like concept of basic income as they please, those in responsible positions must not mislead the public.

The original meaning of basic income is a cash payment, without prior cost burdens or asset income investigations, that the state guarantees to pay monthly to its citizens from birth until death, sufficient to maintain a minimum standard of living. It is truly a sweet and attractive system, a fantastic utopia. In an era where artificial intelligence (AI) and robots completely replace humans, and where humans cannot work even if they want to, and labor income gradually disappears, a social distribution system like basic income may be required for human survival. In such a world, economists would need to create a new production function. Unlike the traditional production function involving labor, capital, land, and technology as inputs, a production function without labor might distribute basic income instead of wage income.

Recently, as unemployment has risen due to the COVID-19 pandemic and existing welfare systems have partially failed, voices advocating for the introduction of basic income have grown louder. However, it seems as if basic income alone has traveled through a time machine from the distant future where the Fourth Industrial Revolution has advanced. Let us look at reality. Is there any sign that labor income is decreasing? According to the Bank of Korea, last year's labor income share was 65.5%, higher than 58.9% in 2010.

The economic crisis caused by COVID-19 has revealed a broad blind spot where welfare systems fail, as vulnerable groups were hit first, unlike the 1997 International Monetary Fund (IMF) foreign exchange crisis or the 2008 global financial crisis. Of course, in such situations, it is clear that urgent surgery is needed to protect disadvantaged groups through emergency welfare systems and to establish a social security system capable of functioning if such situations recur. However, proposing the introduction of basic income in South Korea, which is still at the early stages of becoming a welfare state, is an excessive and leapfrogging idea, even though basic income is cautiously discussed in well-established welfare states in Northern and Western Europe.

Proper basic income is premature, as feasible conditions have not been created, aside from the anticipated difficulty in securing enormous funding. Limited allowance systems that merely borrow the name of basic income risk being misunderstood as attempts to sway public opinion with a fancy name. Rather than repeatedly engaging in hollow debates invoking the post-COVID era grandly, it is time to calmly reassess the overall economic and social issues revealed by COVID-19 in South Korea and to further strengthen the foundation for a sustainable future.

Kim Yong-ha, Professor, Department of IT Financial Management, Soonchunhyang University

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