Solution or Mirage?
Support is said to be growing for Basic Income. Some of our contributors have shown interest and have noticed that this experiment is underway:
Germany to give people £1,000 a month, no questions asked, in universal basic income experiment
The Independent article says,
Researchers in Germany will give a group of people just over £1,000 a month, no strings attached, as part of an experiment to assess the potential benefits of introducing a wider universal basic income (UBI).
The radical idea has attracted a growing amount of interest around the world as a way of potentially supporting people during the coronavirus pandemic and beyond.
Advocates claim a small, regular income from the state to all citizens would help tackle poverty, encourage more flexible working practices, and allow some people to spend more time caring for older family members.
The German pilot study will initially see 120 people handed the monthly sum of 1,200 Euros (£1,085) to monitor how it changes their work patterns and leisure time.
Researcher Jurgen Schupp – who is leading the ‘My Basic Income’ project at the Berlin-based German Institute for Economic Research – said he wanted to discover how a “reliable, unconditional flow of money affects people’s attitudes and behaviour”.
The present trial follows this one in 2019.
Germany’s ‘money for nothing’ experiment raises basic income questions
250 randomly-selected recipients of Hartz IV, the bottom rate “safety net” German welfare payment, have begun to receive their monthly €416 without any conditions attached.
Hartz IV recipients have certain obligations to meet, for example, the need to keep appointments at the job center or to show evidence of looking for work. Failure to meet the conditions might see their benefits cut via “sanctions.”
For the next three years, the activist organization Sanktionsfrei (“Sanctions-Free”) will automatically reimburse any sanctions imposed on the 250 test recipients. Effectively, they will be guaranteed a basic income of €416 every month.
The participants will fill out regular questionnaires, documenting the effects of their new status. An additional 250 Hartz IV recipients will act as the control group, filling out the same form while still being subject to the usual conditions.
Strictly speaking, this endeavour, labeled “HartzPlus” is not a Universal Basic Income (UBI) experiment. For starters, it is backed by a private organization and is not supported by the German government.
…..
some observers of HartzPlus have pointed out that it is not a UBI as it is not paid if the person finds a job which pays more than the welfare claim.
The present experiment is just that, an Experiment.
Germany is set to trial a Universal Basic Income scheme
- Starting this week, 120 Germans will receive a form of universal basic income every month for three years.
- The volunteers will get monthly payments of €1,200, or about $1,400, as part of a study testing a universal basic income.
- The study will compare the experiences of the 120 volunteers with 1,380 people who do not receive the payments.
- Supporters say it would reduce inequality and improve well-being, while opponents argue it would be too expensive and discourage work.
The study, conducted by the German Institute for Economic Research, has been funded by 140,000 private donations.
Interest in Basic Income continues.
There is interest in the USA.
This was reported in July.
Twitter boss donates $3m to basic universal income project
BBC.
Twitter chief executive Jack Dorsey has become the first investor in a radical plan to give people a basic income, regardless of job status.
He has donated $3m (£2.4m) to the scheme, which is being piloted by the mayors of 16 US cities.
He said it was “one tool to close the wealth and income gap”.
The idea of governments paying a basic income to citizens has gained momentum in response to the threat to jobs from artificial intelligence
There are three basic problems with applying experiments in Basic Income to a whole country.
- Unlike social security payments they do not redistribute money by taxation from those who make extra cash out of other people, business and the wealthy, and give some of this surplus to those who have less money. Everybody gets the same basic income.
- Despite claims that Basic Income schemes would give everybody “enough to live on” no proposed system can allow for the variable and extra costs that payments under social security systems (in Europe at least) cover, Housing Benefit (local Housing Allowance), or the extra cash needed by ill or disabled people (PIP and so on). The German plans, for example, would mean that somebody who is unemployed and paying rent would still have to rely on getting welfare payments to cover housing costs that go beyond the sum given.
- Apart from not fully covering people’s needs, they do not answer a problem that unemployment brings for those who wish to work: to use our abilities as we can.
There would have to be criteria to get Basic Income – they could not be open to anybody from anywhere to come and claim.
A large proportion of public spending would go on any variety of the scheme. We would have the absurd position in which those with large private incomes would get an extra “top up” every month.
Would pensioners get the money? If this is the case we would see a huge increase in spending on the retired alone.
As Anna Coote says (Guardian. 2019. Universal basic income doesn’t work. Let’s boost the public realm instead)
The cost of a sufficient UBI scheme would be extremely high according to the International Labour Office, which estimates average costs equivalent to 20-30% of GDP in most countries. Costs can be reduced – and have been in most trials – by paying smaller amounts to fewer individuals. But there is no evidence to suggest that a partial or conditional UBI scheme could do anything to mitigate, let alone reverse, current trends towards worsening poverty, inequality and labour insecurity. Costs may be offset by raising taxes or shifting expenditure from other kinds of public expenditure, but either way there are huge and risky trade-offs.
Money spent on cash payments cannot be invested elsewhere. The more generous the payments, the wider the range of recipients, the longer the scheme continues, the less money will be left to build the structures and systems that are needed to realise UBI’s progressive goals.
The report Coote cites, Universal Basic Income. A Union Perspective, says,
At the heart of the critique of UBIs contained in this brief is the failure of the most basic principle of progressive tax and expenditure, which can be summarised as “from each according to their ability, to each according to their need”.
Whereas universal benefits such as healthcare or unemployment payments are provided to all who need it, UBI is provided to all regardless of need. Inevitably it is not enough to help those in severe need but is a generous gift to the wealthy who don’t need it. It is the expenditure equivalent of a flat tax and as such is regressive. But the consequences are more than a question of principle.
The estimates of funds required to provide a UBI at anything other than token levels are well in excess of the entire welfare budget of most countries. If we were able to build the political movement required to raise the massive extra funds would we chose to return so much of it to the wealthiest, or would it be better spent on targeted measures to reduce inequality and help the neediest?
What’s more such schemes require the total current public welfare budget to be used. Do we really want to stop all existing targeted programmes such as public housing, public subsidies to childcare, public transport and public health to redistribute these funds equally to billionaires.
UBI would erode the basis for the welfare state.
And this raises other practical political issues. With a UBI in place many have argued that the states obligations to welfare will have been met. That people would then be free to use the money as they best need – free from government interference. With such a large increase in public spending required to fund a UBI it would certainly prompt those who prefer market solutions to public provision with powerful arguments to cut what targeted welfare spending might remain.
Arguments put by proponents of UBI to counter these questions usually involve targeting of payments, or combination with other needs-based welfare entitlements. However, as this report notes, models of UBI that are universal and sufficient are not affordable, and models that are affordable are not universal. The modifications inevitably required amount to arguments for more investment, and further reform, of the welfare state – valuable contributions to public debate but well short of the claims of UBI.
It is a mirage solution.
It is one of the unfortunate mirages of UBI, as clear from the evidence and trials outlined in this report, that UBI can mean all things to all people. But the closer you get to it the more it seems to recede. A further, and significant point for trade unionists, is the assumptions UBI proponents make about technological change and the effect on workers. The argument that technology will inevitably lead to less work, more precarious forms and rising inequality is deeply based on the assumption that technology is not within human control. In fact, technology is owned by people and can be regulated
by government if we chose.
Work is not disappearing – there are shortages of paid carers and health care workers, amongst others, across the globe. And precarious work can be ended at any time with appropriate laws. What is missing is the political will to control technology, and work, for the benefit of the population. In this regard UBI is a capitulation to deregulation and exploitation, not a solution to it.
If, in a sense, with the Pandemic work is disappearing. Is a massive transfer of spending from the welfare state to everybody through UBI, instead of targeted schemes that focus on maintaining employment, the answer?
The German scheme, DW noted back in 2019, has this difficulty,
The most persistent criticism that advocates of a universal basic income face is the question of cost. For example, to take a crude measurement, if the close to 70 million adults in Germany were all to receive an unconditional, universal basic income payment of €416 per month (the current Hartz IV rate), the annual cost to the German government would be around €350 billion. In a savings-obsessed country, that might prove a hard sell.
All the problems outlined above indicate that Universal Basic Income is not a solution but a mirage.
The neoliberals of the Adam Smith Institute think differently.
