The Unconditional Basic Income: Is it really that easy?

Politicians

In the first two parts of my series of articles, I described how the Unconditional Basic Income (UBI), in the opinion of its supporters, could comprehensively reform our economic and social system and completely change social values. Reading through the arguments of the supporters, one gets the impression that the UBI can only have positive effects. But not all are of this opinion.

In the view of many critics, first of all, the proposed financing models (which I referred to in the previous part) are completely unrealistic. According to the Süddeutsche Zeitung, for example, enormously high taxes are necessary to finance the UBI. Michael Hüther, Director of the Institut der Deutschen Wirtschaft (Institute of the German Economy), also assumes astronomical costs for the state in an article in the magazine, “Focus”.

Other critics point to problematic social effects and contradict the proponents’ opinion that the UBI will make a society as a whole freer and happier: with a UBI, the state is shirking its responsibility for the weaker members of society, even talking about “abolishing the welfare state”.

Nikolaus Pieper, therefore, describes the introduction of a UBI as “flammable” (see article). Michael Fratzscher points out in his economic column in the “Zeit” that gainful employment also means important social recognition. If all those who cannot find a job are sufficiently supplied by a UBI, the state and society will no longer have to worry about them – which will lead to a two-class society with a financially half-financed, but nevertheless deeply frustrated, deprived underclass.

As already mentioned in part two of this series, the big unknown factor in the UBI calculation is the question of how people will behave if they would no longer be dependent on a working income. The optimists assume that most people will continue to work in paid employment – to have a meaningful job, but also to supplement the UBI (which is not meant to be more than a livelihood security). The lazy ones, who would then do nothing more at all, would remain minor exceptions in terms of numbers. The skeptics, on the other hand, point out that with a UBI too many people would either not be able to do any meaningful work at all or only pursue hobbies without economic value. But then the system, which relies on income from gainful employment to finance it, would collapse.

In addition to financial viability, the expected shift in the balance of power between employees and employers is the second main point of criticism of the UBI. The advocates see a new bargaining power of employees: those who are fundamentally secured by the UBI will no longer be forced to accept any unattractive work and thus achieve a much stronger bargaining position on the labour market.

The critics, on the other hand, fear that employers could use the UBI to carry out wage dumping that has never been seen before: the UBI would exempt employers from the obligation to secure their employees’ livelihoods. This would render the minimum wage agreements that have been in force up to now obsolete and would turn the UBI into a company subsidy. The fact that top managers such as Timotheus Höttges, head of Deutsche Telekom, and Siemens CEO Joe Kaeser have also shown sympathy for a UBI in recent years has strengthened this mistrust: the suspicion is that, when the big bosses pronounce themselves in favour of a UBI, it is probably only because they expect advantages for their companies.

Others also see the corrective bargaining power of the trade unions in danger, because no socio-politically motivated minimum wage setting would be necessary any more:“What many unemployed people mistakenly consider to be a ‘land of milk and honey without compulsion to work’ would, in reality, be a paradise for entrepreneurs, in which employees would have fewer rights than before and trade unions would no longer have any (negotiating) power”, writes Christoph Butterwegge in Focus.

And there is another problem that is remarkably rarely discussed: how do we deal with the issue of migration? If you pay the UBI to all people who are legally staying in a country (i.e. also recognised asylum seekers), you create an enormous migration incentive. If you only pay it to the citizens, you create a two-class society in which the nationals are paid for being nationally, while foreigners have to work hard in poorly paid jobs to survive.

In the now very numerous contributions of the proponents of a UBI, one finds remarkably few statements on the topic of migration – one has the impression that this problem area is avoided. Clear statements as to whether the UBI should be tied to legal residency status or citizenship are difficult to find. A clear statement comes from the Basic Income Network: “When a basic income is introduced initially in one country, foreigners should also receive the basic income.”

The author, Thomas Straubhaar, who was quoted several times in the two previous articles, proposes a waiting period for migrants in his book, “Radikal gerecht” (Radically fair) who are only to move into the UBI after a longer stay in the country. A text by Hagen Kopp, who rejects a restriction to its own citizens as “racist”, deals in detail with the migration problem (although it is extremely leftist).

In an article for the Süddeutsche Zeitung, however, Nikolaus Pieper points out that a UBI, which includes foreigners legally residing in a country, could be an obstacle to integration:”How can the integration of one million refugees into the German labour market succeed if every recognised asylum seeker – and this would be mandatory in the new system – would receive €1,000 a month, no matter what he does?”

The poverty researcher, Christoph Butterwegge, who has already been mentioned, also sees the problem of excessive migration incentives in focus: “After all, an unconditional basic income would almost inevitably lead to a foreclosure policy on the part of the respective government, because this transfer would create new incentives for poverty migration.”

The only solution to the problem of migration seems to be a globalised basic income, which applies in all countries of the world and thus compensates for unilateral migration incentives. Hagen Kopp describes this idea in his already mentioned article, but it is even more utopian than that of a national UBI and appears to be beyond the realms of feasibility.

The UBI is probably not as simple as one might think from the arguments of the protagonists. The fourth and last part of the series will highlight the concrete steps towards an evaluation and the chances of realising the UBI!

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