Income Distribution and

Basic Income The Agenda of 21st Century

Pertti Koistinen

Income distribution Who owns the agenda?

Economist (theory, methods, perspectives, say?)

Social scientist (theory, expertise, advocacy?) or

Policy makers (advocacy, responsibility, policy design?)

Long silence

Did the neo-liberal ideology lead to a loss of target? 0r

Did the social policy experts loose their reputation and worthiness?

The pragmatic policies adopted after 2008 avoided the worst but didn’t tackle

the essential and provide a durable response to the structural crisis of capitalism

like

Transparence of financial markets

The rise of inequality

Sustainability of the welfare state?

Income distribution policy – a taboo? No adequate discussion and no reforms despite income distribution is a crucial

question

There are some policy oriented economist like Stiglitz (2012, 2014), Sachs (2011,

2012), Piketty (2014) and Riihelä, Sullström & Tuomala (2012)who opened the issue

but, those economist who have been advocates for European policies and national solutions, fall silent. Why?

Where are those who could open the Pandora's box?

What could we learn from historical experiences? Income policies before the

first world war and there after? In times of great depression?

Distribution of incomes over the life course and between generations and

social groups?

Who starts talking about solidarity tax and capital tax and progressive taxation?

New agenda is needed: sharing risks, new policies of income distributions,

sustainability of the welfare state?

The evidence of the welfare state The financial power of the welfare state increased and stabilized since the 1980

everywhere in the developed economies and enabled

Provision and development of a universal education, healthcare, and social

serviced and maintaining the social security (including the pensions)

State intervened also in setting rules not only collecting taxation

This led to birth of financial market

The growing tax and social insurance contributions enabled governments to take on ever broader social function which contributes now 25-30 % national income

and takes even more important role in redistributing this.

State redistribute them in forms of replacement income (pension and

unemployment allowance) and transfer payment (family allowances, guaranteed income etc.)

Wfs become powerful agency in regulation of the financial markets and but, it

lost its political agency and power.

Question of redistribution Modern redistribution does not succeed in transferring income from the rich to

the poor?

Modern distribution consist of public services and replacement incomes that are

more or less equal for everyone and the middle class benefits from the more than others – at least more than low income groups.Mathews effect

Modern redistribution is base on a logic of rights and principle of equal access to

certain number of goods and services but,

More and more of working aged population are out of these options

More and more are excluded by various reasons.

Is the foundations of wfs in safe without a larger and updated concept of

income distributions?

Question of capital incomes and

Global response to global risks of economy

Rethinking income distribution as a whole Four forms of taxation and public incomes:

Income tax

Capital tax

Consumption tax and

Contributions to social insurance programs

Three forms of redistribution

proportional

Progressive

Regressive

But does these systems work adequately?

Does the government use them?

Do we need something new?

Reasons to rethink 1 Increase of wealth and extension of global production chains

hos to deal issues of distribution of wealth and redistributions of

risks?

The markets is allowed to determine that some human being are worth vastly less than other but, how long this can be tolerated

without negative consequences?

Extended and flexible forms of participation on paid work and market relations work over the life course how to create new

concepts and sustainable models for division of incomes and

revenue's over the life course

Reasons to rethink 2

The cost and share of public investments on human skills

development increased in a knowledge based society enormously there is a need to find a better balance for public and private

investments in long run.

Structural changes in the contractual systems and pay like increase

of self-employed, short-term contracted, new forms of capital

incomes and free lancer outside the standart employment and social income protection need for new concept of income

distribution

Sheep labour created a problem of productivity and social

sustainability of the wfs model.

Why basic income? Basic income is needed as social security and insurance reform but,

does it be enough?

Income courante for low income group and for those with low and

inconsistent incomes

Extension of social right for all in working age

Do we need more?

Economic funds and buffers

New regulations for contributions to public vs private sponsored

social insurance programs

More transparence and control?

Extension of a progressive taxation?