Universal basic income: An alternative to Corona emergency aid?
With the Universal Basic Income (UBI) safe through the crisis? Experts: Explain what they think of the idea.

Text: Lena Reiner and Niklas Golitschek

Emergency aid, short-time working allowances, basic security – the Coronavirus pandemic has put the German welfare state to the test in 2020. The different programmes, with their confusing requirements and bureaucratic hurdles, have given new ground to an old idea: the Universal Basic Income (UBI).

High approval for UBI

In a survey conducted by the opinion barometer for Central Germany, mdrFRAGT, more than half (55 percent) of the approximately 15,000 participants from the federal states of Saxony, Saxony-Anhalt and Thuringia were in favour of a UBI. This is in line with a representative 2017 survey by Splendid-Research, in which the support was at 58 percent.

Prof. Dr. Karl Justus Bernhard Neumärker is Head of the Department of Economic Policy and Constitutional Economic Theory at the Albert Ludwigs University in Freiburg. He is currently setting up the Freiburg Institute for Basic Income Studies(FRIBIS) and is working on the UBI. In spring 2020, he spoke at length with this magazine about the topic.

Introduction also in the crisis

Neumärker advocates to introduce the UBI being in the crisis as well. After all, state aid, which presupposes a need, is only partially efficient. “Everyone is behaving strategically,” he says referring to the state funds that would benefit particularly affected groups in times of crisis. Be it the bailouts for banks from 2008 on or emergency aid during the coronavirus pandemic in 2020. “The basic income is quite flat and helps everyone,” he says.

In order not to burden public coffers too much in uncertain times, Neumärker has devised a mechanism: In the event of an economic crisis, the basic income is also reduced, while it continues to fulfil its function of securing livelihoods. The economist therefore distinguishes between two types of the UBI.

Net (or: crisis) UBI

The crisis UBI is between 500 and 700 euros per citizen. At the same time, interest income such as rents, rents or loans is frozen until the crisis is over. Because landlords, bank employees and other affected persons also received the crisis UBI, they were not threatened in their existence. “Everyone can survive,” Neumärker says. Benefits such as short-time working allowances or credit allowances are therefore no longer needed, not to mention social assistance. What happened in previous crises was a “gigantic redistribution towards people who generate income without performance.”

Gross (or: participatory) UBI
According to Neumärker’s estimate, the participatory UBI should be between 1000 and 1500 euros per citizen. “After the crisis, everything is going up again,” Neumärker says. No one has to bear new burdens, for example through credit aid. Contractual obligations could be fulfilled again in this normal time. Participatory BGE calls Neumärker this model also because it is meant to be more than just a livelihood. In doing so, he justifies the higher sum. Only in this way would it be possible to “participate halfway in our society through a basic income”. Whether it is a visit to the theatre or the football stadium, that’s freely electable.

After the economy and public life had come to a standstill in many places, Neumärker now sees the opportunity for a socially political and environmentally compatible reboot. “There are new benefits that people didn’t know before in our hectic world,” he observed. Reduced traffic and aircraft noise, less work stress, more leisure time. In addition to the UBI, Neumärker is therefore also in favour of meeting or even improving the environmental targets for this restart. In politics, however, he sees other tendencies: “It is just a matter of pushing gross domestic product up to the old level.”

A power-sharing issue

It is certainly not only politicians who are sceptical. Employers and trade unions are equally critical of a UBI. Because they could lose power, says Neumärker. People would thus have “increased self-determination and time sovereignty. The opponents do notlike that,” he says. Ultimately, it is a question of power-distribution.

However, Neumärker has not yet worked out how exactly a UBI could be financed. He cites vat or income tax as ways to increase it. “We know that you can finance it. Also permanent,” he draws his insight from the state’s billion-dollar programs. In the crisis, basic income could even be cheaper than the previous measures. “It may cost us a bit of competitiveness, but we are ready for the crisis again,” he says. In addition, in normal times, benefits such as unemployment benefits and pensions would be eliminated. If children only had a UBI of 500 euros per month, the total cost would fall again.

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In Germany, there is even a kind of basic income, says Neumärker, referring to child benefit. “It’s a subsidy, it doesn’t feed a child,” he says. But it is not checked whether someone really needs the child benefit. The only decisive factor is whether someone is entitled to it. “No one in society complains that the rich also receive child benefit,” he cites names an example. It is simply a so-called “net state transfer”.

UBI as a respect payment

In his opinion, this could also be the case for the UBI. “The basic income should be an individual payment of respect from birth to death,” he says. Every citizen in the state is entitled to this. In order to counteract a possible fear of mass immigration, additional criteria could be defined: for example, that citizens lived in Germany for at least five years. “This is partly discriminatory, but there are opportunities to be created,” adds Neumärker.

This “immigration into the social system” could also be counteracted by introducing an universal basic income throughout Europe. Neumärker has also designed a model for this scenario, which he calls the euro dividend. “Citizens tolerate the opening up of markets, the integration of the European Union,” he says. A tax can be extracted from these advantages, the profits of free trade. According to Neumärker, this means: “250 euros on top on all national social security systems.”

Simulation shows wanted system

Neumärker has also conducted social contract experiments with student since 2010. Neumärker has also conducted social contract experiments with student since 2010. “In this simulation they do not know who they are and are asked what social and redistributive system they want,” he explains. Here he observes again and again that the participants preferred a market economy. However, before they knew the individual risks of this, they advocated an universal basic security. Neumärker is thrilled:

This is the UBI in a capitalist market economy!
Bernhard Neumärker

Werner Stickler, former community manager of the platform “Utopia” and as such an old hand at topics of social utopias, considers the UBI to be fundamentally interesting: “It depends on what kind of UBI.” He sees “above all confidence gain” as a great advantage of the UBI: “I do not need to be afraid for my existence and with less fear I tend not to follow groups that live on fear. The ability to choose work, to shape life, will produce more active, committed people who want to solve problems. Something like this will help a lot in economic crises.”

UBI as a new livelihood

He is in favour of a UBI which replaces the livelihood, i.e. unemployment benefit I and II and the minimum pension. However, health insurance should be exempt from this: “The same applies for subsidies granted for various impairments.” At the same time, Stickler sees the danger that rent prices could rise if landlords for example factored in the UBI, because: “People have the money now.” This would probably require accompanying measures.

Like Neumärker, Stickler finds the common counter-argument that no one would work any more unsustainable: “The majority of people want to be recognized for what they do. Work fills time, for many it also makes sense.” However, it could lead to a shift in the fact that more people would work part-time in less attractive fields of activity, such as waste collection. At the same time, it is possible that more people will get involved in such areas: “Ten hours a week, I can do it. Afterwards a thorough shower and everything is good again.”

New value for work

Generally speaking, “It is also fun to create something. Solidarity farms, urban gardens, open workshops will receive a lot of support. This creates new products, perhaps small businesses, demand-oriented sales networks.” Those who do not need to work like to work. Over time, the word “work” gets a different sound: to advance something, to implement it.

Programmes such as the Voluntary Social Year (FSJ) could also receive greater support, Stickler assumes: “This helps the community and strengthens the feeling of solidarity.” Even for conservative people, the UBI-pioneer sees a viable concept. What that might look like? “Young people are immediately switched to the UBI system and do the FSJ after school or an apprenticeship and before their studies. Adults who switch, however, would have to cancel first. To avoid this, one day a week could be worked for the non-profit.” In five years’ time, the FSJ will also be together. In that time, they could get the UBI like the young people.

Refinancing considered

In fact, according to Prof. Dr. rer. pol. habil. Ute Luise Fischer the UBI should be unconditional. She has been a professor of political and social sciences at the University of Applied Sciences Dortmund since 2010 and co-founded the initiative “Freedom instead of Full Employment” (Freiheit statt Vollbeschäftigung) and promotes the proposal of an unconditional basic income in lectures and publications. In 2004, together with Helmut Pelzer, who died in 2017, she published a proposal for the design and financing of the future of our social security with an “Unconditional Basic Income for All”.

She explains: “In my idea of basic income, I always think about refinancing.” Therefore, the current (crisis) situation complicates the debate on an unconditional basic income: “The argument that one should only pay it to the needy is now becoming even more drastic. Of course, this is a bit pity.” At the same time, she is pleased with the attention that the idea receives: “There are many more signatures than a few years ago with similar petitions.” She also observes that the term is becoming more well-known: “You associate something with it – something more correct than often in the political discourse during recent years.” Often the term was used incorrectly, which is better this time. The petitions clearly formulated unconditional payouts to all, which remains close to the idea. She explains in detail what she means in the video:

But what does a UBI mean for her? “One that is not paid temporarily, but permanently. One that is unconditional, as the name suggests. This means, in particular, that no means test is carried out. That neediness is not a criterion at all.” Fischer considers the word ‘neediness’ to be discriminatory. It is also important that no compensation is required: “These are the central aspects: decoupled from any kind of advance payment and it is paid out individually.” It is also important to have a certain minimum level above the livelihood level set by the Federal Constitutional Court annually for the tax-free allowance, “so that it really makes it possible to decide whether and how much one may earn in employment.” Only in this way the UBI will enable participation, as Neumärker also demands.

As far as the payment is concerned, everyone who lives in Germany is entitled, without the inclusion of age or nationality. “However, I think you can think about whether you pay it only from 16 years on or only half up to 14,” Fischer explains. Having already calculated how the UBI could be financed, she knew how much more expensive it would be if it was actually paid out to every single resident of the country: “We were expecting 82 million at the time.”

Scepticism in times of crisis

Fischer is very sceptical about the concrete figures for the financing of a UBI, especially in times of crisis. After all, they mean more expenditure. But she thinks it makes sense for prevention in better times: “If the state already has a basic income and then a crisis comes, then it is well prepared. It’s like an immune system in crisis. It stabilises the population.” In general, she would be pleased if the petitions were successful, because: “If you decided to pay for it for a while, then we would see the positive effect. We can’t see them if we don’t try it.”

Why does Fischer think that the UBI has not yet been introduced?

“I deliberately use the concept of guilt, because we are in such a guilt debate,” she says. The question is: who is allowed to get money from the state for nothing? Because when it comes to basic income, the rule is quite radical: everyone should get it. “Now in the crisis, we have in mind all those who have no income without their own intervention.” And there was great unity: “Please help these poor people.” She laughs and says, “That’s such a basic idea of justice.” Then she explains, “But that’s not what we use for basic income.” The kind of justice that forms the basis for basic income can be found in the constitution. “The state should grant everyone a dignified life,” she concludes, emphasizing: “This is a completely different concept of justice. It’s much more radical.’ She therefore sees the current debate as a danger that this aspect will not be discussed enough in the light of the current situation.

Two misunderstandings

“We have this stubborn concept of justice, which you find through all parties, that the state must give nothing without return,” she says. She sees two misunderstandings in this idea:

  1. What is recognised as consideration is only work performance. What is not recognised here as a benefit are, for example, welfare services or all kinds of services for the common good. Compensation is therefore always narrowly seen as a willingness to work for the labour market.
  2. The second misunderstanding is even more serious: the argument about the quid pro quo itself is analytically wrong. Compensation in return is an economic view of justice, and the principle also belongs in economics: money against commodity, wages against labour power. But when we talk about ourselves as citizens, we talk about ourselves as a whole person. The concept of justice does not fit here. This is a matter of a relationship of solidarity.

Most also agree when someone is unable to help themselves, to help them. But basic income is also much more radical. And in some areas we already have it. This is not so alien to us. If you look at the school system, for example. No one has to pay anything back just because they don’t do anything after graduation that pays off in Heller and Pfennig.

Ute Fischer

For the UBI, however, Fischer sees a difficulty: “If we were to introduce it now in the crisis, it would not be possible without additional stimulus measures, because otherwise we would have too much loss of sales.” Current measures, such as short-time working allowances are related to the current income and are therefore easier to implement. “That’s always the problem of short-term stuff. You cannot just change your lifestyle in the short term.”

Political scientist: UBI does not solve distribution problems

The political scientist Prof. Dr. Christoph Butterwegge, who taught at the University of Cologne until 2016 and conducts research on the development of the welfare state, takes a completely different view on the UBI. Together with Kuno Rinke, he has published the book “Basic Income controversially. pleas for and against a new social model”. He argues that it is particularly important in crises to take into account life, work and income situations. “The existing welfare state is based on the need-coverage principle, according to which, for example, someone receives housing benefit when the rent is high and wages are low,” Butterwegge explains. If everyone were to receive the same benefits on a flat-rate basis, there could be no question of social justice. Even temporarily, he sees no solution in a UBI, “because it would not solve (distribution) problems, but at most create new ones”. Especially since it would be difficult to finance.

Butterwegge describes the fact that there are a wealth of different concepts for a UBI as strength and weakness at the same time. Although everyone can choose a suitable model, there is no common concept that can successfully represent a social movement. From the different political directions, it is sometimes even pursued with opposing objectives.

He himself therefore distinguishes between neoliberal and idealistic BGE concepts, which are either unjust or unrealistic:

While the neo-liberals want to smash the existing welfare state with the basic income, the idealists mistakenly believe that the basic income is a kind of an icing on the cake for the continuing welfare state. This is completely illusory because of the enormous cost that the basic income would entail.
Christoph Butterwegge

Butterwegge also does not share the argument of self-determination, which Neumärker cites. As a left-wing UBI critic, he thinks that people would definitely continue to work because they wanted to make themselves useful in society. Only: “Then the low-wage sector, which already accounts for almost a quarter of all employees, would become even wider, because entrepreneurs would refer to the payments of the state in any collective bargaining.” This low-wage sector is already promoting various forms of poverty.

Redistribution of private wealth

In order to combat poverty and social inequality effectively, it is therefore necessary to redistribute private wealth instead of a “scattergun approach”. Therefore, the universal basic income does not contribute to social justice. “It would be much more sensible to call for a significantly higher statutory minimum wage without exceptions,” Butterwegge says, citing an alternative solution.

In addition, he advocates a solidarity-based citizen’s insurance, which is to build on Bismarck’s tradition of a predominantly contributory social security system. In this citizen’s insurance, it would include “a needs-based basic security for all residents”; poverty-proof, repressive and without sanctions. So a basic income – just not unconditionally.

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