Universal Basic Income: Free Money for a More Equal Europe?
WHAT IF YOU COULD RECEIVE a sum of money each month from the European Union, without working or having to prove that you need it? This is the not-so-crazy idea that is on the rise all across Europe.
Thomas More first introduced the idea of a guaranteed minimum income in the early 1600s in his novel Utopia. “Nobody owns anything but everyone is rich,” he wrote. “For what greater wealth can there be than cheerfulness, peace of mind, and freedom from anxiety?”
Yet, for a long time after, the idea was shelved as just that: too utopic to ever be broached seriously. Yet, as countries across Europe continue to struggle with high unemployment and low social standards, the idea of a universal basic income (UBI) is enjoying a comeback. According to a 2016 survey conducted among 10,000 respondents, 64% of EU citizens would vote in favor of a basic income if they were given the choice.
UBI is one of those rare policies that is supported by both the left and the right, though for very different reasons. While the left believes it could help tackle poverty and reduce inequalities, the right sees it as an opportunity to scale down welfare systems, cut costs, and incentivize unemployed workers to get jobs.
That aside, UBI schemes are increasingly on the agenda because of automation. Faced with the prospect of massive job losses due to artificial intelligence, universal employment seems increasingly unattainable. Researchers at Oxford University estimate that “47% of jobs are automatable from a technological capabilities point of view.” Self-driving cars are just one example.
And, even if a job cannot immediately be replaced by artificial intelligence, there is a good chance that it will involve digital skills that are simply lacking among many workers in European countries today. A 2018 study calculating the “digital acuity” of the French labor force found that the average French employee scored a measly 3 out of 10.
According to the definition set by the Basic Income Earth Network (BIEN)—a group of academics and activists interested in universal basic income—UBI is a “periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement.” Yet advocates for a UBI cannot agree on how high this cash payment should be, which is why so many different small-scale UBI experiments have popped up all over the continent.
Finland was the first European country to ever experiment with handing out free cash. Between 2017 and 2018, two thousand unemployed Fins received €560 per month—the same amount of unemployment benefits they would otherwise have received. They were free to work part-time jobs on the side. Since 2014, a private crowdfunding campaign launched by the German startup Mein Gründeinkommen (“My Basic Income”) raised enough money to pay 300 participants a €1,000 monthly income over a period of 12 months.
A UBI was also a key component of socialist candidate Benoît Hamon’s program during the 2017 presidential elections in France, and is still a flagship feature of his party’s program for the European Parliament elections. Meanwhile, over a dozen French regional offices are playing with the idea of handing out a basic income to all those who need social benefits but cannot qualify, or do not dare to ask for it. According to socialist politician Jean-Luc Gleize, 34% of people in France do not ask for the “Revenu de Solidarité Active”—the minimum income guaranteed by the government to unemployed people or underemployed workers—despite qualifying for it.
The city of Barcelona is currently trying out a measure, called B-Mincome, on 2,000 families. And in September 2018, Dutch economist Harold Boven presented a “financially covered plan for basic income that would end all poverty in the Netherlands.”
But the small scale of these experiments makes it difficult to draw any solid conclusions at the national, let alone European, level. “Studies on micro-experiments have mainly confirmed the positive effects of (unconditional) basic income on reducing poverty and inequality, but questions on how to finance and implement basic income on the macro level remain,” writes Cemal Karakas, author of the European Parliament’s Research Service report on a UBI.
In its 2017 “reflection paper,” the European Commission writes that it sees the UBI as part of a European effort “try out new models to fit new realities.” However, in February 2017 the European Parliament rejected a proposal which saw the basic income as a way to compensate for the “possible effects on the labor market of robotics and AI.” While the report called for considering a tax on robots and AI, Estonian MEP Kaja Kallas claimed that a “robot tax will kill innovation.”
Financing a UBI is the real elephant in the room. While some economists argue it will be impossible to finance without raising taxes, there is no consensus. Baptiste Mylondo, a left-leaning French economist who campaigns for a UBI, thinks France could finance a high enough basic income by substituting it for its current system of “non-contributory social benefits” and crucially, raising taxation. “In terms of funding, I am looking to increase the income tax rate and its progressivity, but also to introduce a progressive wealth tax. My goal is to reduce inequalities. The most effective way is clearly to combine a flat rate and progressive levies.”
Taking into consideration the current poverty threshold, Baptiste Mylondo believes €1,000 per month per person could be sufficient. “Older generations and disabled people would still receive additional benefits from the state,” says Mylondo. “But this would only work in an extensive welfare system like the French one.”
The difficulty of imagining a UBI at a transnational level adds a level of complexity to the debate. Yet, for Mylondo, it is precisely at the European scale that a UBI could yield its greatest results as a way to reduce the disparities and inequalities between the different EU Member States.
“There is a lot of tension within the European Union. On migration for instance. If Romanians come to France, public opinion objects. But if English people migrate here, it does not seem to be as problematic. This is simply because of disparities in income and living standards between France and Romania,” explains Mylondo. “The UBI could help pacify tensions around migration within the EU.”
PHILIPPE VAN PARIJS, a Belgian political philosopher and economist who founded the Basic Income Earth Network in 1986, suggests creating a kind of a UBI for Europe: “Everyone whose tax residence is in the Euro zone would benefit from the ‘euro-dividend.’”
Under the euro-dividend, every EU resident would receive a sum of two hundred euros every month, though Van Parijs admits this number is arbitrary. “This sum would have to be adapted to each country’s cost of living,” he says. Indeed, two hundred euros per month does not afford you the same living conditions in Bulgaria as it does in Germany.
Mylondo also supports the idea of a euro-dividend and argues that tax residency should be a sufficient condition to receive a UBI. “Every tax resident contributes to the production of resources,” he says. “As such, they are entitled to receive a share of the market value.”
Van Parijs sees this policy as providing four main benefits. “It will stabilize the European economy, but also demographically by enabling people to stay in their country without having to migrate for economic reasons. It will provide a cushion to enable European welfare states to resist social and fiscal competition. And finally, it will reinforce the legitimacy of the European institutions.”
He is aware that his proposal would require a drastic change in the European treaties in order to grant the EU the necessary fiscal powers. Moreover, the Member States would have to agree unanimously on the updated treaty which, once it would be introduced, would still need to be ratified by a qualified majority in the European Council and by a majority in the European Parliament.
But even in this best-case scenario, a European UBI would not magically solve all of Europe’s problems. “Disparities between countries would still exist. We live in a multi-speed Europe,” says Mylondo. “But the UBI would help level inequalities in the spirit of solidarity. It would be the first step towards a social Europe.”
Part of UBI’s appeal lies in its ability to bring value to a “quaternary” sector of the economy, which is made up of socially useful activities that are often not remunerated, like nurturing and taking care of the elderly. “When I teach in a school, the state considers that I am contributing to the creation of resources,” says Mylondo. “But not when I do the exact same job as a volunteer.”
Universal basic income could thus be a catalyst for citizens to engage in community-building activities, says Van Parijs. “In 2016, Mark Zuckerberg defended UBI. He explained that it offered a cushion for people to try new ideas. It is true that you are not going to create a start-up with 200 euros per month, but at least you would be able to take more risks.” Although the danger is that it could increase short-term, precarious employment by allowing employers to shorten contracts.
Another argument is that it would reduce people’s willingness to work and make them lazy. But Mylondo disagrees. “The fear of laziness should raise questions about which values we uphold in our society and encourage us to recognize other contributions to our collective wealth. In any case, even if some were freeriding, I believe it would be foolish to punish everyone by dismissing UBI altogether.” A study conducted in 2016 found that only 4% of Europeans “said they would stop working if they had a basic income.”
For Philippe Van Parijs, UBI is a radical yet necessary measure. “It is a radical proposition, yes. But a radical proposition for a sane economy that does not destroy people who work and enables them to grow, to learn, to take time to take care of their kids.”
Clearly, for it to succeed, a European UBI needs a much more integrated Europe than what currently exists. “The euro-dividend is only possible if we have a form of European cohesion,” says Van Parijs. “But it is also obvious that it will reinforce this cohesion if it were implemented.”
Even if the idea of a European basic income has claimed a space in the political debate, there is a long way to go before the measure can be considered at the macro-level.
Yet, as Thomas More wrote in Utopia, “You wouldn't abandon ship in a storm just because you couldn't control the winds.”
This article appears in Are We Europe #4: This Is Not An Elections Issue