Question 3
Universal Income proposal by a candidate for the 2017 French presidential election
The following essay will be about the proposal of a Universal Income in France, from
the politician Benoît Hamon who runs for the May 2017 Presidential Elections. It is related to
advanced microeconomics as it tickles with the optimal size of public spending and the
financial assistance to individuals by the State, which is often in the core of the Welfare
Economy. Eventually, it also copes with Elections and social choices.
The Universal Income would be state handouts to all adults, irrespective of income.
The cost according to the candidate proposing this, Benoît Hamon, will be around
$374,82bn. So as to fund it, there should be an overhaul of taxes. The plan has been
backtracked several times as it seemed too ambitious. Ten economics academics, including
Thomas Piketty, has called this plan “economically credible and socially audacious”. “If
properly designed and clarified, the universal basic income could be a key building block in
the reorganisation of our social model,” wrote the economists, who included Emmanuel
Saez of the University of California Berkeley. He has said he would begin in 2018 by giving
18–to–25-year-olds and the jobless poor 600 euros a month, increasing it over time to 750
euros and to all the French. Benoît Hamon has stated that there would not be any tax
increase to fund the Universal Income. It would be from the super profit tax on the banks,
which does not include tax payers, and also from an overhaul of the CICE (the tax credit for
encouraging competitiveness and jobs).
Such an expense is expected to bring a fiscal multiplier, a notion from the economist
Keynes, which is the ratio to the change of the National Income to the change in government
spending that causes it. However, if the people do not trust enough the funding of the
policy, an increase in spending would not occur as the population would, anticipating, save
for the upcoming increase in tax to fund the social policy.
from an imperfect arbitrage. This results leads to challenge the economical intervention of
the state in the economy.