What motivates people to work harder? What causes them to strive to improve their economic circumstances, to get ahead in the world, to earn more and to be more productive?
Are people better motivated when they receive more government payouts or when they are uncertain about their economic future?
Those who believe in the welfare state see great benefits in providing economic security to everyone. In motivational terms, they believe that a secure individual, one who is not worrying about his next meal, who does not suffer the burden of quotidian concerns, will be liberated to work at what he really wants to do.
Allison Schrager has summarized the arguments of those who believe in the virtue of providing enhanced security through a guaranteed income:
A proposal in Switzerland ensures that everyone, whether through work or government handouts, is paid enough money for a comfortable lifestyle. Artist and founder of the movement Enno Schmidt explained to the magazine: ”What would you do if you had that income? What if you were taking care of a child or an elderly person?” Schmidt said that the basic income would provide some dignity and security to the poor, especially Europe’s underemployed and unemployed. It would also, he said, help unleash creativity and entrepreneurialism: Switzerland’s workers would feel empowered to work the way they wanted to, rather than the way they had to just to get by.
The question then becomes: does having a comfortable lifestyle guaranteed by the government motivate people to do what they really want to do? Or does it turn them into slackers?
Does the recipient of government largesse feel infantilized? Does he believe that he is being paid not to work? Does he feel like a decadent aristocrat, living off the labor of others?
Apparently, his comfortable condition does not provoke more initiative and more hard work.
After consulting with psychologists and economists Schrager responds that people are not motivated by security. They are motivated by uncertainty.
In her words:
But if we define success as economic growth, security hardly holds the key. Economic growth comes from employing labor and capital more efficiently. That comes from people working hard and innovating. Each of these requires motivation. Thus, motivation is the foundation of success. What drives motivation? The need to resolve uncertainty. In other words, the opposite of guaranteed security.
Because uncertainty is inherently uncomfortable, when it crops up we’re compelled to resolve it. That’s how uncertainty motivates people.
But if you are certain to be paid a comfortable salary, no matter how many hours you work or education you have, there’s no motivation to become more productive or educated—and that undermines growth.
So far, so good.
The problem is: just as too much security demotivates, so does too much uncertainty. Some people who are wards of the state feel that they are so far that they cannot imagine getting up. Too much uncertainty makes people feel hopeless about changing their circumstances through their own initiative.
Ideally, policy strikes the right balance it protects the most vulnerable from hardship but also exposes people to the right kind of uncertainty. This requires ensuring that low-wage workers have viable way to provide their own security, by enhancing economic mobility.
The right degree of uncertainty must be coupled with job opportunities. Otherwise, it will produce despair.