• A Critical View of Basic Income Schemes and Unconditional Basic Income

  • Par Birgit Daiber | 18 Jan 22 | Posted under: Communs
  • Birgit Daiber gives an overview on current discussions about universal basic income and its different concepts.

    I still remember the groundbreaking arguments of André Gorz in the 1980s. He predicted the end of the traditional working society and called for the transition to a free knowledge society. He also spoke out in favour of redistributing work and income. Later, he justified the need for a basic income in his book Labour between Misery and Utopia. But that was far from the beginning of the debate. In human history, there have always been approaches to separate income and work. We can read about it in the well-documented history of the idea.

    The new debate on the idea of ​​an unconditional basic income took off in the 1980s. The Basic Income Earth Network (BIEN) was founded in 1986, initially on a European level. Initiatives have been founded in many countries since the 1990s and, finally, the European Citizens' Initiative for Unconditional Basic Income was launched in 2020 with the support of 23 countries participating.

    Intense discussions about basic income are now taking place. This is the most important socio-political debate of our time.

    The debate is very intense because of the different specific concepts. It also forces us to think about the structure of the capitalist system and the compensatory function of social systems. It is not just a historical fact that capitalism is built on coercion and exploitation. This can be seen in the capitalist centres, not least in the regulations that apply to unemployment. Often there is no longer any question of freedom of choice and self-determination.

    I would like to briefly discuss the different concepts of basic income. In literature, two large groups are named: firstly, social utopian concepts and, differentiated from them, neoliberal concepts.

    The neoliberal concepts go back to the economist Milton Friedman, who formulated the concept of negative income tax in 1962. This means that a previously determined amount of money is offset against the tax liability. Anyone who earns less than this tax allowance should receive a government grant that fills the difference. The charm of this approach lies in the fact that it does not require extensive social bureaucracy and that all citizens are entitled to the basic income. However, the problem arises when taking a closer look at the newer concepts: on the other hand, the working conditions should also be individualized and, for example, collective wage agreements and protection against dismissal should be superfluous. The neoliberal approaches thus represent a direct attack on workers' rights. In addition, they can be used as combined wages and thus exert considerable wage pressure.

    As an example of the neoliberal approach, which is linked to the idea of ​​negative income tax, the concept of Solidarity Citizens' money by Hohenleitner and Straubhaar can be used, which the authors presented in 2007. They assume that social spending will rise steadily due to demographic developments in the German-speaking countries. That is why they draw the conclusion that constant repairs to the existing social system are not enough and that a system change must be carried out. They see the solution in a basic income with the following cornerstones:

    The state grants all citizens a transfer payment equal to the subsistence level. This is financed from the state budget through taxes. The transfer payment is not tied to any conditions. All other social benefits financed by taxes and duties will be abolished. The socio-politically motivated regulation of the labour market will also be abolished: protection against dismissal, collective agreements and minimum wages. Employer contributions to social security would also be dropped.(1)

    The social utopian concepts are different. Ronald Blaschke, who has been campaigning for an unconditional basic income for many years, says:

    “Basic income is a monetary form of unconditional access, guaranteed to all people individually, to means that secure livelihood and enable social participation, access that is not compulsory for work or for something in return and is not connected to a means test (socio-administrative income / asset test). Basic income concepts are – in connection with further political changes – emancipatory if they are used in a national as well as in a global context

    a) for the liberation of all people from material blackmail by capital owners and women from material dependence on men,

    b) for the aim of a redistribution of privately appropriated social wealth and the fair distribution of social power,

    c) are based on or promote production based on human needs and ecological sustainability.

    A key element of emancipatory basic income is the sufficient amount. A basic income that is too low is formal, but not really unconditional – because for economic reasons it forces you to work / wage work.

    The social utopian concept presented by Attac offers some specific ideas of how to finance the unconditional basic income. The basic income should therefore be financed as follows:

    • Elimination of tax-financed basic pensions,
    • Elimination of civil servants' pensions,
    • Elimination of unemployment benefits,
    • Elimination of family benefits.

    At the same time, the following taxes are to be levied or increased:

    • Value added tax,
    • Inheritance and gift taxes,
    • Property tax,
    • Tax on foundation profits,
    • Wage and income tax.(2)

    The socially utopian concepts are like the neoliberal ones about a service that is open to all citizens. In contrast to the neoliberal concepts, however, the socially utopian concepts do not anticipate the dismantling of workers’ rights, but rather make suggestions, for example, for the restructuring of the health insurance system in favour of general citizens' insurance, general reduction of working time and minimum living wages.

    It is important to be clear about these differences between socially utopian concepts and neoliberal ones and to look precisely into the details of what is offered as basic income. If not, we may fall into the trap of neoliberal aggressive politics – despite having the best intentions.

    The neoliberal concepts openly put existing workers' rights up to abolish them. This makes them highly questionable. Workers’ rights have been fought for by the workers’ movements for more than 150 years. It seems absurd to me to question this. And the implications of neoliberal concepts for workers’ rights explain why for example trade unions are very critical of all concepts involving an unconditional basic income.

    I can enrich these facts with personal experience: in 1994, I was coordinator for the concept of the Greens in Germany for a reform of basic social income. The concept had been developed together with welfare associations and initiatives. It included a living income and unbureaucratic access, so it was humanistic oriented. It was not an unconditional basic income for everyone, but a concept that could help people affected by poverty to live in dignity and to escape the poverty trap – without being forced to work. Through this approach, the reform debate gained momentum. In 2003, the red-green government decided on its reform concept. They called it Basic Income – but in reality it was Hartz IV – a massive deterioration in the rules on unemployment as a whole and for basic social security. It was the reduction of income to the absolute subsistence level plus massive compulsory work. This experience may show that we always have to look to the reality behind the words when it comes to social standards.

    In this way the social utopian concepts remain as hope. However, I have a few points of criticism here as well. Wherever practical experiments with the unconditional basic income have been carried out up to now, they have either been short-term projects for young people or they have been carried out with precariously employed people and people affected by unemployment.

    One of the short-term projects is the crowd-funded, one-year scholarship being implemented in Berlin. This is where young people use this time mainly to explore their options and develop creative new ideas for their future.

    One of the longer-term projects is the Finnish 2-year basic income project, which has now been completed. 2000 randomly selected unemployed Finns received 560 euros every month for two years, tax-free and unconditional, instead of the normal unemployment benefit – it was an unconditional basic income. In some cases, it did not even amount to more money than the unemployment benefit previously paid. The biggest differences: the recipients received the unconditional basic income just like that. No applications, no forms, no bureaucracy. And they were allowed to earn as much as they wanted in addition to the monthly payment of 560 euros.

    The project was examined in a study and compared with a control group that did not receive a basic income. The main aim was to find out to what extent the participants in the project were able to find work opportunities. The study states that, in the first year, there was hardly any increase in employment, while in the second year there were definitely positive effects, which, however, were difficult to assess because there was another general employment promotion programme operating at the same time and asymmetrically to the project.

    The following are considered positive results: According to the study, the participants felt better psychologically because of the basic income. They were happier and more confident with their fellow human beings. It takes a longer period of time to develop positive effects on job search.

    In a survey of the Finnish population in the pilot project, 46% of those questioned were in favour of the introduction of an unconditional basic income.

    However, there is also the question of whether the focus on work in evaluating the experiment should be the main approach.

    My preliminary conclusion on the unconditional basic income is therefore that we need many more practical experiments. New projects may take place on a local, regional or national level and, like the Finnish project, they must be backed up by the science. But Finland also shows that it takes more than two years for such projects to bear fruit.

    My last example took place far away from Europe, in Namibia, where an unconditional basic income financed by donations from the churches was realized in 2008-2009. Otjivero-Omitara, a village in the middle of the desert with 930 beneficiaries, was selected as the location. Then, a form of pension was paid. The very small sum of money per month ($9) was paid to each of the women of the village.

    In the run-up, the model project was occasionally heavily criticised. The basic idea of ​​eradicating poverty was endorsed, but two main points of criticism were identified:

    • Poor people cannot use money responsibly,

    • Paying cash without consideration gives people rights without responsibility.

    However, based on the empirical data, it can be shown that the number of malnourished children has decreased. The number of school attendances has increased and the number of medical consultations, which was measured by the clinic fees paid, has also increased.

    In addition, the cash payments have led to a decline in begging activities and thus to a gain in human dignity. Social relationships have improved, and the community has been strengthened. For a long time there was a struggle to implement the model throughout Namibia. In 2013, however, its supporters were forced to acknowledge that the resistance was too great.(3)

    It might seem a little strange to introduce this example from the Global South into the discussion in Europe. In this discussion, however, it is particularly important to look beyond the highly industrialised countries. Climate change, desertification of large areas of land, and the merciless privatization of land are forcing people to seek refuge in mega-cities – and this development will continue to increase in the future. More and more people are forced to live in extreme poverty, often without any shelter. The question of a minimum livelihood is an urgent question in the Global South as well. The context is mentioned in the Attac concept, too.

    Back to Europe – to the EU and to reality: there are state minimum income systems in 22 countries, in 5 countries these are implemented through collective agreements. They should all serve to fight poverty. Some authors say that these systems can be used as starting points for the introduction of an unconditional basic income.

    Since the social prejudice still prevails that many unemployed people are not willing to work and settle down comfortably with state benefits, the regulations on minimum income are usually associated with coercive measures if those affected do not accept work – no matter the conditions.

    In most of the regulations, as in Austria, there is in principle the obligation to provide consideration in order to receive social benefits. See also in Great Britain (Working Families Tax Credit), France (Prime pour l’emploi) and the USA (Earned Income Tax Credit) the right to social transfers only grows with the income.

    This compulsion to work is high in Germany, Hartz IV in Germany led to an increase of low-paid wages. Hartz IV not only puts those who depend on it under pressure: it also pushes wages down. Around 9 million people in Germany work in the low-wage sector.(4) That is a quarter of the workforce. People who depend on Hartz IV are forced by bureaucracy and often work at the social welfare rate or do unpaid internships or complete further training that often lacks real meaning. Now, with the new government led by Socialdemocrats, new rules are proposed: their central election promise was a general minimum wage of 12 Euros and the change Hartz IV in two directions: less bureaucracy (they call it Bürgergeld) and – really new – a general basic income for children. Probably the increase of the general minimum wage will have positive effects. For the rest, we will have to look at the implementation regulations. Concerning the level of benefits in the EU, we see that, except in Ireland and the Netherlands, the minimum income in EU countries only guarantees a subsistence level, well below the poverty line recognised by the EU of less than 60 per cent of the national average income.

    Finally, I would like to point out that it is absolutely imperative that rules and regulations for combating poverty no longer contain any compulsory work and that they have a livelihood security level. The dignity and freedom of choice of people affected by poverty is a greater good than the short-term budget interests of countries or the joy of capitalists over unpaid work and cheap wages. And, at this point, we are learning from the debate on unconditional basic income.  


    This contribution was made at the International Conference on Basic Income in Copenhagen, organised by Transform! Danmark on 23 Oct. 2021.

     

    References

    (1) Hohenleitner Ingrid, Straubhaar, Thomas, Bedingungsloses Grundeinkommen und solidarisches Bürgergeld – mehr als sozialutopische Konzepte, HWWI und Uni Hamburg, 2007.

    (2) Rätz Werner, Krampertz Hardy, 2011, Bedingungsloses Grundeinkommen – woher, wozu und wohin?, AG SPAK Bücher, Neu-Ulm.

    (3) Haarmann Claudia, Haarmann Dirk, Jauch Herbert, Shindondola-Mote Hilma, Nattrass Nicoli, Van Niekerk Ingrid und Michael Samson, 2009, Der entscheidende Unterschied – Das Grundeinkommen in Namibia, Namibia NGO Forum, Windhoek.

    (4) DIW, Wochenbericht 14/2019.


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