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A New Fiscal Contract? Constructing a Universal Basic Income and a Social Wage

Keith Rankin


Capitalist societies such as New Zealand depend on a healthy interaction between the private and public domains. New growth theory emphasise the socio-cultural contribution of the public domain to economic well-being. In contrast, neoliberal theory emphasises private sources of growth, such that the state and the social welfare system impose “deadweight costs” on the wealth-creating private sector.

After ten years of neoliberal-inspired fiscal attrition a crisis is emerging in New Zealand. Tax cuts have benefited high-income earners and the expenditure on public revenue has become increasingly miserly. Yet a society cannot be rich if its members are poor. A civilised society requires an adequate public revenue to maintain and enrich its social capital and infrastructure. A fiscal regime that provides a social dividend to all adults regardless of their income is a “basic income system”.

This paper argues that a basic income system can resolve the underlying fiscal paradox facing modern developed economies such as New Zealand’s, and should be incorporated into a new fiscal contract. In fact, a universal basic income is the logical outcome of any social accounting system predicated on the natural synergy between the private and public spheres of activity.

Cover photo of Social Policy Journal

Documents

Social Policy Journal of New Zealand: Issue 09

A New Fiscal Contract? Constructing a Universal Basic Income and a Social Wage

Nov 1997

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