basic income
Is basic income the way to prosperity or idleness? (Credit: Christian Horz/Bigstockphoto.com) (via: bit.ly)

During a half-day workshop Saratha Davala from the Basic Income Network (India), Karenina Schröder from Circle Blockchain e.V. (Berlin), Ralf Krämer from United Services Union (Berlin), Fred Harrison from the London-based Land Research Trust, Christina Strohm from Mein Grundeinkommen e.V. and Klemens Witte from the DOC Research Institute discussed the prospects of UBI (Universal Basic Income) in different countries.

A new balance for welfare

Sarath Davala from Basic Income Network (India), a prominent proponent of UBI, briefly laid out the challenges particular to various world regions. Reflection on the ‘Global South’, led him to highlight “food security, malnutrition, access to health care, access to education, high levels of unemployment, and large rural populations” as the most pressing current issues. He compared this with the different challenges faced within the Northern hemisphere, namely that “we witness a rapidly changing landscape of work, a higher number of job opportunities eroded by 21st-century management models and the rise of artificial intelligence. On top of this is a rising insecurity among a population which faces stagnant wages and people caught in a poverty trap”. He also observed that we have not yet obtained results from the pilot projects set in rich countries. Davala’s main point detailed that in many welfare states, the social policy was geared towards providing services and benefits to a small number of citizens. In the context of rapid technological change, he warned that this model is no longer sustainable because it would render unemployment endemic. He posits that a new balance must be struck between the four sectors of government, market, family and community and that a UBI would help to fulfil this. Its introduction could be a milestone and an incentive for facing future challenges as we strive towards more equitable societies.

UBI’s introduction could be a milestone and an incentive for facing future challenges as we strive towards more equitable societies

Fred Harrison initiated his contribution with the claim that capitalism has led to endemic poverty and premature death even in rich countries. He explained that UBIs do not address the basic flaw of the capitalistic economy, rather they cement social inequality. Thus, he challenged the notion of unconditionality and remained critical towards the idea that people should be paid the same amount irrespective of where they live (rural vs. metropolitan areas). Moreover, he opposed the suggestion that the wealthy would even be eligible for the UBI.

Figure 1: Can Family A live on Family B’s basic income?

Universal Basic Income: The way to prosperity or idleness? 1

 

One of Harrison’s main counter-arguments exposed that raising the financial means necessary for UBI through income taxes would incur deadweight losses. Thus, he advocated for a land tax in line with the ideas of the political economist, Henry George. Alternatively, he would advocate for the rent dividend which he called inclusive prosperity because that would not incur dead-weight losses. He generally supported dividends paid from welfare funds and mentioned the Alaska Oil Fund as a good example, which pays citizens a yearly amount ranging between 1 000 and 2000 Dollars.

Social policies are key

Ralf Krämer from United Services Union (Berlin), sternly opposed the UBI. From his perspective, an emancipatory UBI (ranging from 1000 to 1500 Euros) that would still provide citizens with a considerable amount of qualitative social services could never be financed without wreaking havoc on the German economy. He was highly critical of a neoliberal UBI model that would entail a cutback of all social services and would only amount to 800-1000 Euros even if this lower sum would allow for a more realistic chance of funding. Another reason for him to oppose the UBI was the risk of inflation. The introduction of a UBI financed through raised VAT or energy, for example, might entail taxes. Furthermore, Krämer believes that work itself holds immense intrinsic value and comes with a certain social recognition that would be lost with the introduction of a UBI. Another potential downside to the UBI is the possibility that some jobs would be left undone due to a lack of motivation to fulfil those roles. Regarding the fear that jobs would become automated, Ralf was convinced that there would be as many jobs created as there would be erased. Instead of the UBI – considered a radical approach – Krämer was more in favour of a renovation of social policies and he would begin with shortening the working week. He also proposed higher minimum wages and increased social benefits for the unemployed.

In his presentation, Klemens Witte from the DOC Research Institute, put emphasis on the crisis of the labour market. He anticipated that this would increase with technological progress and erase more jobs than it creates. This is particularly likely with jobs that simply require the performance of routine tasks which can easily be accounted for by programmable machines.

Another concern that Witte underlined was the rise of the so-called platform economy. The platform economy might be capable of replacing existing jobs, but it may perhaps also disrupt whole industries and sectors. As an example, he referred to how self-driving cars would transform the transport sector in a dramatic way which will be impossible to anticipate if we only reason in traditional trajectories. He also suggested a link between the dwindling of decent job opportunities and relatively high vulnerability to mental diseases across the globe.

The platform economy might be capable of replacing existing jobs, but it may perhaps also disrupt whole industries and sectors

Although psychological disorders are not generally on the rise globally, they could become more severe with endemic and sustained long-term unemployment or a heightened feeling of financial insecurity. Studies indicate a clear correlation between poor mental well-being and unemployment or financial insecurity. In addition, Witte pointed to the results of a cash transfer pilot project which demonstrated that people’s mental well-being was substantially improved by increased financial security. He opted for the introduction of the UBI in countries which lack a substantial welfare system. His ambition is rooted in pilot projects which showed overwhelmingly positive results implying the potential to reduce child malnutrition, crime rates, and to increase the number of educational achievements, etc. For full-fledged welfare states, he proposed a gradual approach including the reduction of working hours, raising minimum wages, an abolition of sanctions against the unemployed and a targeted UBI for children in low-income households, in order not to safeguard the hard-won achievements of welfare states.

The challenges of choice

Christina Strohm presented her insights into the effects of the UBI on well-being. Her organisation Mein Grundeinkommen e.V. runs a prize draw offering a 1-year UBI for participants. Since its founding, Mein Grundeinkommen e.V. has given away approximately 250 one-year-long Universal Basic Incomes handing out 1000 Euros per month. Recently, a book has been published which records several stories of how people have changed and developed during the year they received the UBI. For the vast majority of recipients, the UBI inspired positive changes, according to Strohm. Almost everybody stayed in their jobs feeling more confident in devoting more time to the activities and people that were important to them. A small number of people choose to leave their jobs in order to retrain or to get a degree. Mein Grundeinkommen e.V. does not encourage consumerism. Therefore, she explained, they had initial difficulties dealing with the choices of some participants which at first sight looked like plain consumerism. One of the winners used the money to travel to Australia three times in a row during the course of the year. The organisers behind mein Grundeinkommen e.V. learned to honour these personal choices however odd they might have appeared. Christina Strohm also mentioned that many of the recipients reported that their mental and physical health greatly improved through the perception of enhanced financial security. They named this the “UBI feeling”. She also announced plans to initiate a research project together with Herthie School of Governance in which the experience of UBI recipients will be studied systemically.

Mental and physical health greatly improved through the perception of enhanced financial security

Karenina Schröder from Circle Blockchain e.V. (Berlin) introduced the concept of a blockchain-based UBI concept which is currently being trialed in a community of like-minded people in Berlin. She also prompted reflection on the challenges of gender balance and feminism within the frameworks of a UBI.

One of her most urgent concerns was to involve more women in the creation of different UBI policies and to ensure that their voices will be heard. Discussions about the UBI and related projects are mostly led by men from the Global North. Nevertheless, she saw more potential in the UBI than drawbacks. Schröder was convinced that a UBI would reduce poverty and increase more people´s opportunity and freedom to choose their occupation and who they may spend their time with. She was strongly in favour of the UBI, because thousands of (mostly female) care workers would be rewarded financially for their hard work. One of the major risks she anticipated was the application of a neoliberal UBI concept alongside a major cutback of social policies. The main strength of a blockchain-based UBI within a community would be its potential to improve the quality of life of lower income groups. Schröder explained that Circles is a decentralised network based on trust among the members of the community, who exchange services without the need for a fiat currency.

A café will be opened in central Berlin, that will accept Circles as its main currency.

Figure 2: The decentralised network of Circles

Universal Basic Income: The way to prosperity or idleness? 2

 

You may also be interested in:

How will UBI change our lives?
A discussion of Universal Basic Income
Yandex.Taxi and the platform economy
Beyond GDP: Alternative measures of wealth
Universal Basic Income: The way to prosperity or idleness?

SHARE
Previous articleDisruption in the platform economy: Interview with Klemens Witte
Next articleDOC at the Global Solutions Summit
Klemens Witte

Research Associate, DOC Research Institute, DE

Klemens Witte, Research Associate at the DOC, is specifically interested in economic questions, international relations, and policy-making. He holds a Masters in Political Science and Intercultural Communication (Martin-Luther-University Halle-Wittenberg), a second Masters in Baltic Sea Studies (Södertörns University College/Stockholm), and a postgraduate LL.M. in International Economic Law (Southwest-University for Political Science and Law/Chongqing and Martin-Luther-University Halle-Wittenberg). Klemens Witte has gained international experience in universities in Kazan, Moscow, Kaliningrad, Minsk, and Beijing. He has further work experience within the fields of internationalization and education as a desk officer with Swedish government ministries and as a lecturer from the Moscow State Institute of International Relations. He speaks German, English, Swedish, Russian, and Chinese.