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Can the introduction of an unconditional basic income improve the living conditions of socially disadvantaged people and what effects would its implementation have on high- income groups?

Hausarbeit 2018 26 Seiten

Sozialwissenschaften allgemein

Leseprobe

TABLE OF CONTENT

1.0 Introduction and Problem Formulating

2.0 Definition

3.0 Historical Development

4.0 Implementation approaches for an unconditional basic income
4.1 Former global implementation approaches

5.0 Discussion
5.1 Reasons for an unconditional basic income
5.2 Importance of unconditional basic income for low-income population groups (example Germany)
5.3 Importance of unconditional basic income for high-income groups
5.4 Criticism and objections to the unconditional basic income

6.0 Opinion survey - An empirical study
6.1 Composition of the sample
6.2 Evaluation of opinions on the basic income

7.0 Conclusion and Outlook

List of References

LIST OF ABBREVIATIONS

Abbildung in dieser Leseprobe nicht enthalten

TABLE OF FIGURES

Figure 1: Survey Sample Education Level

Figure 2: Survey Sample Net Income

Figure 3: Opions on UBI and Millionaires

Figure 4: Would people continue to work?

Figure 5: Is the UBI financially viable?

Figure 6: Should the UBI be introduced?

1.0 Introduction and Problem Formulating

The idea of a fixed sum, which everyone should receive without compensation, is - depending on the interpretation - up to several hundred years old and has been considered by representatives of all political directions.

But in recent years it has increasingly found supporters. There are good reasons for this. Work and economic life are changing at a pace that was hardly imaginable just a few decades ago. Automation, digitization and networking are the key words that mean in practice: The number of jobs that will increasingly be performed by smarter machines in the future is likely to rise. Where self-propelled trucks will take care of freight transport, where machines provide care services, the risk of losing their job will increase for thousands of people. This development is accompanied by growing dissatisfaction among those who are already out of touch with the labour market.

The basic income is the response for a digitized working world and makes people free, say proponents. It sets false incentives, is too expensive and incalculable, say the opponents.

Nonetheless, this topic is an approach which arises in order to provide a solution to these omnipresent concerns and in this paper, I will examine the effects of a basic income on high and low-income groups in order to see if a basic income would be realistic or just a solution for the short-run which is not applicable on all groups of the society.

In this homework I will first define the unconditional basic income, determine its source and then go into attempts of implementation in order to deal in greater detail in the main part with the effects on the population groups that I have just mentioned. I will also use a survey to try to reflect and explain the current opinions of those who would be affected.

In the end of this paper, I aim to be able to answer the question of whether unconditional income could become reality or whether it continues to be a utopia far away, by weighing the pros and cons, the knowledge I have gained and the evaluation of the survey.

As it is difficult to look at the unconditional basic income in general, I will focus on the German situation and often explain examples from Germany in order to create a basis for constructive considerations and to give an understanding of how complex and controversial the subject can be.

2.0 Definition

The term ‘basic income’ is understood to mean ‘a monetary benefit for all citizens that is equal in its amount’.1

Vanderborght and van Parijs define an unconditional basic income as ‘an income that is paid on an individual basis by a political community to all its members without means testing or compulsion to take up work’.2 A similar definition is used by the Netzwerk Grundeinkommen (Basic Income Network). Thus, the concept stands for ‘an income that a political community unconditionally grants to each of its members. It should be guaranteed [...] without means test and without obligation to work or other consideration’.3

From the above definitions, the following three characteristics can be derived, which are characteristic of all concepts of an unconditional basic income.4

1. Individually guaranteed entitlement: The UBI is paid to each individual from birth to death, regardless of family or partnership ties.5
2. No means test: people receive the UBI regardless of their financial situation and without proof of means.
3. Without consideration: the payment of the benefit is neither linked to the willingness to work nor to previously paid contributions, as in social insurance.

The Netzwerk Grundeinkommen also mentions as a fourth basic element that ‘the level of payments must be such as to secure one's livelihood and enable participation in society’6.

But this criterion is not a mandatory feature of a UBI. There are a number of approaches that meet all three of the above criteria but provide a basic income level below the socio-cultural subsistence level. This is called a partial basic income.

However, there is a condition for obtaining an UBI. ‘Citizenship and/or a certain period of residence in the country is a premise for receiving a basic income’7

3.0 Historical Development

Thomas Morus (1478-1553) first put forward the idea of a guaranteed income with the argument that it was more suitable for fighting crime than the death penalty.8

Johannes Vives (1492-1540), on the other hand, recommends establishing public welfare financed by alms instead of private welfare for the poor. Based on the Jewish-Christian principle of charity, this was not only more efficient, it could also be linked to a practical obligation to work. Various European cities orient themselves towards this idea and set up aid for the needy in the following decades. Contrary to Vive's idea, Thomas Paine (1737-1809) proposes a payment to all citizens without consideration.9

In 'Agrarian Justice', written in 1796 by Thomas Paine, he proposes to pay a single payment of 15 pounds to each person who reaches the age of 21 and an annual pension of 10 pounds from the age of 50.10 Thomas Paine, an important figure in the French and American revolutions, is often regarded as the real father of the idea of a basic income.11

John Stuart Mill (1806-1873), English philosopher, economist and liberal thinker, deepened the idea of an uncontrolled basic income. In his work "Principles of Political Economy" he describes that this system does not consider the abolition of private property. It is a system of distribution of goods, capital and labor. In this distribution, a minimum is determined for the livelihood of each member of a community, whether able to work or not.12

Milton Friedman (1912-2006), Nobel laureate, is seen with John Meynard Keynes as the most influential economist of the 20th century. He proposed the system of negative income tax and supported the basic income.

In the USA, the term "unconditional basic income" is today associated primarily with the name Milton Friedman, despite the very different characteristics of the models, which can be politically assigned to both left and right social policy. The different and often disregarding approaches are now brought together by the Basic Income Earth Network (BIEN), which was founded in 1994 and emerged from the Basic Income European Network. BIEN organises a congress every two years. The global debate is no longer only about the exchange of different ideas within the national framework, but also about the establishment of a global basic income against the background of globalisation problems.13

4.0 Implementation approaches for an unconditional basic income

The idea of a UBI seems to meet with quite broad approval among the population, even if many are sceptical. Over the past few years, several surveys have been conducted in Germany, such as those by Dalia Research in spring 2016 or Splendid Research in autumn 2017. Most of these surveys came to the conclusion that a narrow majority of Germans would generally support the introduction of a UBI.

Of course, one must always be cautious with surveys (of which there are surprisingly many on this subject in the meantime): As surveys do not have consequences for people, it promotes emotionally based answers, and with such a complex topic, yes/no questions are a delicate matter at all.

Switzerland has become much more concrete: In June 2016, a vote was taken on the actual introduction of a UBI, with a fixed amount: 2,500 Swiss francs (currently a good 2,100 euros) per month for all adults and 650 SFr (around 550 euros) for minors, including non-citizens living in the country. This of course gave the matter a much higher weight than any survey without any obligation.

The initiative failed however clearly: 78% of the asked ones rejected the introduction of the UBI, only 22% were for it (contributions: www.sueddeutsche.de and www.zeit.de). The main argument of the opponents was financing: the state could only secure payments through massive tax increases. Higher taxes, however, would stall the economy and lead the country into a vicious circle. In addition, the concept would lead to a slackening of the economic driving forces and undermine the personal responsibility of the citizens. Thus, the greatest unpredictability in introducing an UBI lies not even in the financing - but above all in the question of how people would behave if they received an UBI.

Proponents such as the Basic Income Initiative nevertheless regard the vote as a success, because almost a quarter of the voters were in favour of actually realising the UBI.

The most widely observed experiment is currently taking place in Finland: 2,000 randomly selected unemployed people have been receiving a monthly sum of 560 euros for two years since 1 January 2016 - unconditionally and without accountability and in any case even if they find a job in the meantime. The experiment should show how people behave under these conditions, especially whether the incentive to look for a job changes positively or negatively.

In the meantime, the experiment has almost been completed and a detailed evaluation is not expected until 2019. So far, only a few participants have made statements that predominantly point to a positive boost in motivation (contributions: www.deutschlandfunk.de and www.deutschlandfunkkultur.de, engl.: https://www.theguardian.com/commentisfree/2018/aug/07/universal-basic-income-rich-finland-work-benefits).

However, the question is how meaningful the results will be. Because the Finnish experiment does not correspond in many essential points to the actual idea of an UBI:

First of all, only people who were unemployed were selected, so the participants are by no means representative of the total population. Secondly, they are only individuals and not a whole society; thirdly, the amount paid out of 560 euros per month is far from being enough to secure a living. Finally, the experiment is limited to two years, so the participants are faced with the prospect of falling back into their previous situation if they do not manage to find a job during this time.

The idea of the UBI, however, is to free people permanently from the obligation to necessarily have paid work. According to this, the Finnish experiment - no matter how it ends - is generally regarded as interesting, but not really meaningful.

4.1 Former global implementation approaches

There are now many examples of approaches to an unconditional basic income, which I will present below. It can be said in advance that each country and its living conditions and policies are different and therefore cannot be transferred immediately to other countries just because it has worked or has not worked in that country.

In Brazil, the first steps towards an unconditional basic income were taken under President Lula. At first only the poorest received a small amount, by 2010 the payments were to be extended to the entire population.

In 2004, Brazil was the first country to include the right to an unconditional basic income in its constitution. Law 10.835/2004 establishes the right of all Brazilians to an unconditional basic income. A state benefit is guaranteed for all citizens who have lived in the country for at least five years. This should cover the basic needs of nutrition, education and health - regardless of whether the recipient works or has assets.

However, a clause in the law (the "renda básica" is to be introduced "gradually") postpones its implementation. So far, only the Bolsa Família has been introduced, a state benefit for the poorest households in the country. This is conditional and requires means testing. Although the Bolsa Familia now reaches about a quarter of all Brazilians, many more needy people lack information and support from local administrations.

From 2008 to 2014, in the small Brazilian village of Quatinga Velho near São Paulo, the Brazilian non-governmental organisation ReCivitas paid out an unconditional basic income to all recipients on a monthly basis, without exception or condition, in order to test its effectiveness in practice.14 To date, the pilot project has been financed mainly through donations. The basic income paid by ReCivitas is 30 real per month (around 11 Euros) - around 130 Euros per person per year. The balance after four years: Up to 127 people received the basic income at the same time. They invested the largest amount of money in improving their own living space, followed by medicine for their children. In third place were various income-generating measures.

In Namibia, the inhabitants of Otjivero-Omitara received an unconditional Basic Income Grant (BIG). The aim was to record and document the impact of the BIG on poverty and to convince the Namibian government to introduce the basic income nationwide.

From January 2008 to December 2009, the BIG coalition organizing the BIG in Otjivero paid out a Basic Income Grant (BIG) of N$ 100 (approx. = 8 Euros) per month to the approximately 1000 registered residents of the village. Due to its positive effects (reduction of malnutrition, unemployment, number of early school leavers and reduction of crime),15 the project was continued on a private basis with a monthly payment of N$ 80. According to the BIG coalition, this reduced payment could only be secured until March 2012.The Namibian government did not want to implement the basic income nationwide, about which the initiators express their disappointment.16 The Namibian government did not want to implement the basic income nationwide. Since March 2012, the payment of the reduced basic income has depended on the receipt of donations, which no longer allow a reliable monthly payment. The payments were finally stopped in 2013.

The very positive conclusions, which were drawn six months after the start of the project, have been criticised on various occasions in terms of methodology and content.17

Since social security in India is also absolutely inadequate, a regular money transfer was also provided in Madhya Pradesh (Central India), initially in eight villages, now 22, where poverty is particularly severe.

In the selected villages, a monthly amount of 200 rupees is paid without conditions to every citizen aged 18 and over; for children and young people under 18, the women receive 100 rupees. 200 rupees corresponds to about 10 euros. It is therefore a partial basic income (which does not guarantee existence and participation). People are free to use it.18

The Indian results have confirmed experiences that were also made in Namibia during the pilot project in the village of Otjivero. The most important important successes were: Better nutrition, better health care, higher school attendance, more local infrastructure investments (water supply, road maintenance, better housing) and increased activity of small businesses.

From the outset, these projects have been systematically and scientifically evaluated. This success control allows conclusions to be drawn from the pilot projects and lessons to be learned for other projects, also in other countries. Convincing arguments are available for financing from national sources and international development aid.19

These pilot projects were organised and implemented by women's organisations which are members of the SEWA (Self Employed Women's Association) trade union. SEWA is a large organisation with a total of 1.3 million members. UNICEF became also a valuable partner.

These are all rather positive pilot examples from the past. What is clearly noticeable is that these projects are always well regarded in poorer regions or countries. This is probably due to the financial and political situation and the standard of living in a country. The poorer the country, the better it responds to pilot projects organised through donations. In Germany, for example, it would be a very different amount of money and a very different incentive compared to third world countries to introduce an unconditional basic income. In Germany it is primarily covering basic needs and participating in social life. A developing country would have the same basic goals, but on a completely different level.

Therefore, and for other reasons such as funding and impact, these positive projects cannot be directly applied to all countries. Despite all this, it is important to see these projects as an important basis for further development in such countries and to pursue and expand them in order to improve the country’s economy over the years.

5.0 Discussion

If one deals with the topic unconditional basic income, one realizes fast that this is a heated discussion with many supporters and many, who reject it strictly. At the point at which many consider the financing quite possible, again numerous critics hold against it.

In Germany the discussion is not yet on everyone's lips and many questions would have to be clarified. How would the UBI have an effect? Would people still go to work at all? In the next section I will try to list the effects on the different layers and try to answer some frequently asked questions.

5.1 Reasons for an unconditional basic income

The Basic Income Initiative summarises the main arguments in favour of an unconditional basic income as follows:

1. ‘It is social because it protects everyone against existential anxiety. It creates equal opportunities.
2. It is liberal because it is unconditional and thus puts the creation of the biography more into one's own hands. It promotes personal responsibility.
3. It is democratic because it is for everyone by everyone. It guarantees sovereign participation in social life in business, politics and culture.
4. It is emancipatory because it is bound to the person and thus promotes self-determination. People become more independent and less manipulable.
5. it is simple and reasonable, because it makes the part of the income that everyone needs in any case unconditional. It abolishes unnecessary conditions and controls20 [supplement: and reduces bureaucracy considerably.].’

These are only the most common arguments for a UBI. In the following section I will discuss more specific reasons and effects.

5.2 Importance of unconditional basic income for low-income population groups (example Germany)

The significance of the UBI for low-income sections of the population can be further differentiated according to groups.

[...]


1Jacobi, Dirk und Bechtler, Cornelius, 2007, 8.

2Vanderborght, Yannick und van Parijs, Philippe, 2005, 37.

3Netzwerk Grundeinkommen, https://www.grundeinkommen.de/die-idee, Date: 10.10.18

4Cf. Spannagel, Dorothee, 2015, 3.

5Cf. Blaschke, Ronald, 2012, 11.

6Netzwerk Grundeinkommen, 2012, 7.

7Jacobi, Dirk und Bechtler, Cornelius, 2007, 9.

8Cf Vanderborght, Yannick / Van Parijs, Phillipe. Ein Grundeinkommen für alle?, 2005, 16.

9Ibid

10cf. Reitter, 2012, 13-14

11cf. Ruh, 2016, 8

12https://www.lokalkompass.de/gelsenkirchen/politik/die-geschichte-des-bedingungslosen-grundeinkommens-d785914.html

13Cf. Füllsack,Werner (Hrsg), Globale soziale Sicherheit Grundeinkommen weltweit, Berlin 2006, 82.

14https://archive.is/20130630210019/http://www.entwicklungshilfe3.de/projekte/weltweit/brasilien/brasilien-grundeinkommen/

15https://web.archive.org/web/20130728182321/http://pressemitteilungen.epo.de/?p=1503

16http://bignam.org/BIG_pilot.html

17Ibid

18http://unicef.in/uploads/publications/resources/pub_doc83.pdf

19https://www.grundeinkommen.de/29/11/2012/indien-erfolg-mit-pilotprojekten-fuer-sozialtransfers.html

20Initiative Grundeinkommen Schweiz, https://www.grundeinkommen.ch/5-argumente-fuer-bedingungsloses-grundeinkommen/, access: 17.11.18

Details

Seiten
26
Jahr
2018
ISBN (eBook)
9783668964426
Sprache
Englisch
Katalognummer
v491964
Institution / Hochschule
Budapester Wirtschaftshochschule
Note
1,0
Schlagworte
Basic Income bedingungsloses Grundeinkommen

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Titel: Can the introduction of an unconditional basic income improve the living conditions of socially disadvantaged people and what effects would its implementation have on high- income groups?