by Citizens' Income Trust | Apr 30, 2011 | News
1000 Euro for everyone. Freedom. Equality. Basic Income is the title of a new book (€1.000 für Jeden: Freiheit. Gleichheit. Grundeinkommen in the original) by Götz W. Werner and Adrienne Goehler, published in August 2010. According to the Amazon.de website it is currently in place No. 1,563 of all books being sold, but in the category ‘Social Justice’ it is No. 1. It is clearly of considerable significance to find so much interest in a Citizen’s Income in a European country.
An interesting review of this book appears in the January Review of Books in Sp!ked. The first half of the review is factual and informative and is reproduced below (with permission from Sp!ked. You can read the original dated Friday 28 January 2011 at www.spiked-online.com/index.php/site/reviewofbooks_article/10136/ )
The idea that the state should give everyone a basic income has seized the imagination of Germany’s middle class and politicians.
by Johannes Richardt (head of PR and communications at Novo Argumente publishing house)
At the moment, more than €1 trillion flows into the more or less state-controlled German welfare complex every year. Representing one third of German GDP, this vast amount of money covers every social benefit, from child allowance to health insurance. If the economic stats were not striking enough, of the 80 million people living in Germany only 40 per cent earn a wage. So a large proportion of the population is dependent either partially or wholly upon the state.
But the German welfare state does not just provide a financial safety net. It also seeks to regulate the behaviour of benefits claimants through various forms of lifestyle intervention, such as dictating how much claimants should be allowed to spend on cigarettes. In this regard, the so-called Hartz IV legislation, passed in 2005 by the then ruling Green-Social Democrat coalition, is important. Named after its originator, Peter Hartz – then a social democratic trade unionist and manager of part state-owned Volkswagen before being imprisoned for embezzlement in 2007 – Hartz IV effectively revised the status of the unemployed. They were no longer citizens in need of assistance while out of work: they were deemed welfare dependent. They were no longer people fallen on hard times, but fully capable of getting back into work: they were psychologically dependent upon welfare and incapable of getting back into work.
Hartz IV not only produced a new form of state dependency; it also sought to prepare these damaged citizens for work. To this end, a new sector of senseless and unproductive labour for about 1.5 million of the unemployed benefits claimants was created (thus removing them from unemployment statistics). Under the pretext of empowering the unemployed by psychologically preparing them for the labour market, these benefits claimants are forced into absurd and degrading activities run by highly subsidised companies with Orwellian-sounding names like Neue Arbeit [New Work]. One example of this absurd work-for-work’s-sake philosophy is the Toys Company. In more than 60 factories around Germany, the formerly unemployed people work for an extra €1 per hour on top of their out-of-work benefits, recycling second-hand toys for poor children. One task is to check the completeness of second-hand puzzles. ‘The record for completing the 5000-piece puzzle is just 10 days’, explained Toys Company’s manager, ‘although unfortunately we found out that three pieces were missing’. Götz Werner and Adrienne Goehler refer to this example in their new book 1000 € für Jeden. Freiheit. Gleichheit. Grundeinkommen. (€1000 Each. Liberty. Equality. Basic Income.) They argue for a new model of state welfare distribution which would replace the bureaucratic, behaviour-management regime of Hartz IV with one based on a simple premise: the state would pay everyone a basic income.
At first sight their central idea of a basic income for everybody seems quite charming: Every citizen gets €1,000 from the state every month from cradle to grave. As Werner, the billionaire founder of a drugstore chain, and Goehler, president of the Hamburg Art Academy, note, €1000 represents more than just a living wage. They argue that it also enables people to participate in the cultural life of society.
Because this would be an amount that every person would be legally entitled to, there would be no more degrading means tests and interventions in the lives of benefits claimants. The welfare bureaucracy as Germans know it would be redundant: the unemployed would be freed from doing compulsory labour promoted by the state, and the rest of society would be freed from the imperative of wage labour provided by the market. Income would be separated from work. As one would not need to sell one’s labour in order to guarantee an income, the authors argue, people could choose their line of work, for whom they want to work and for how long. This would lead to a new society in which self-realisation, creativity and compassion replace the existential fears created by the current rat race.
The German political class is partially sympathetic to the idea of a basic income. Hence, with the exception of the Social Democratic Party (plus trade unions), all parties represented in parliament have been discussing various models of basic income at some point in the past few years. For instance, in its party programme, the liberal Free Democratic Party calls for a Bürgergeld (Citizen’s Income), an amount paid out whenever necessary but low enough to maintain the incentive to work. Elsewhere, the Greens call for a Bedarfsorientiere Grundsicherung (needs-based basic provision), and even within the conservative Christian Democrat Party there is support for a Solidiarisches Bürgergeld (solidarity citizen’s income).
… Support for the idea [also] comes from the German middle class. Campaign groups with names like ‘Freedom Instead of Full Employment’ and ‘Federal Agency of Income’ have emerged, advertising their ideas on various websites, in films and at events and demonstrations. It is important to note that support for a basic income does not come from unemployed and poorly educated low-wage employees. It comes from privileged and educated young professionals with middle-class backgrounds who, working in poorly-paid, insecure positions in the media and cultural sector, hope for an unconditional basic income to make their lives that little bit more secure. This is no struggle for abundance for all. For these metropolitan types, a basic income promises security, opportunities for self-realisation and psychological well-being.
It is to the fears and prejudices of this post-material milieu that the book €1000 Each speaks. In this way, the book exemplifies the rampant social pessimism so prominent in contemporary Western societies. The authors describe the insecure working conditions of the ‘creative class’, surviving on short-term contracts and project work, as the future for a society that has given up on the goal of well-paid and meaningful work for everyone. According to the authors, only a minority of people will earn their money in secure, long-term work. The rest of us will be left to the fate currently endured by the creative class, the ‘vanguard of precarious conditions’.
Referring to American sociologist Jeremy Rifkin’s 1995 book The End of Work, Werner and Goehler argue that the advance of globalisation, automation and rationalisation has led to a post-industrial society in which production can no longer serve as the basis of societal wealth. Economic growth, they assert, ‘is a dead duck’. Instead, Werner and Goehler urge us to focus on creativity as ‘the only remaining, sustainably exploitable resource of the twenty-first century’. This is why they argue for a basic income. Because to tap into this resource of creativity, while avoiding the social unrest that will come with the shortage of constant, paid work, requires everyone to be accorded a level of material security.
This is where the first half of the review ends. The second half of the review is highly critical of the whole idea of a Citizen’s Income: ‘Basic income, low aspiration: The idea that the state should give everyone a basic income has seized the imagination of Germany’s middle class and politicians. Their enthusiasm is testament only to the poverty of their ambition’ is the full title of the review. In the next issue of the Citizen’s Income Newsletter these anti-CI views will be reproduced and critically examined.
by Citizens' Income Trust | Apr 30, 2011 | Opinion
BIEN-Suisse, Le financement d’un revenu de base inconditionnel, Seismo, 2010, 204 pp, pbk, 2 88351 049 4, 38 SFr
We normally only review books in English, but with this edited collection we make an exception, not because it contains translations from our own publications, but because it is a sustained argument for the necessity and feasibility of a Citizen’s Income.
Peter Ulrich’s preface suggests that if Switzerland is to experience a society of citizens then it needs more equal incomes and more permeable social class boundaries. Increasing automation and the demands of sustainability will between them mean that not everyone will be employed full-time, so a Citizen’s Income will be needed to provide for the necessary more equal incomes and to enable everyone to be employed part-time. Ulrich recommends that 25% of Swiss GDP (the same proportion as is spent on income maintenance in Switzerland today) should be spent on providing every Swiss citizen with a Citizen’s Income of 1,500 SFr Citizen’s Income. Higher taxes would make a Citizen’s Income of 2,500 SFr per month possible.
Bridget Dommen-Meade’s introduction to the book summarises the chapters and links their discussions into an argument for a Swiss Citizen’s Income’s feasibility. Then come three chapters arguing for the feasibility of a Citizen’s Income in Switzerland: Bernard Kundig’s insightful study of long-term changes in the economy and in Swiss society leads into an argument for a Citizen’s Income funded by an increase in consumption taxes and flat income tax; Albert Jörriman suggests a mechanism which would result in the employed giving back an amount equal to the Citizen’s Income, and he suggests how provision for unemployment and disability might relate to a Citizen’s Income; and both Kundig and Jörriman suggest that a Citizen’s Income of 2,500 SFr per month should be feasible. [This is approximately £1,500 per month or £18,000 per annum]; and Jörriman argues that a Citizen’s Income of this level would not discourage paid employment and would encourage self-employment and co-operatives (p.81). Daniel Hani and Enno Schmidt argue for the same level of Citizen’s Income and also argue for funding by an increase in consumption taxation, and emphasise the additional labour market choices in which a Citizen’s Income would result.
The next few chapters are translations of published material about other countries. Marc de Basquiat argues for the feasibility of a Citizen’s Income of €12.60 per day in France; Ingmar Kumpmann and Ingrid Hohenleitner suggest a phased implementation of a Citizen’s Income in Germany, so that the effects on national income can be evaluated; and Pieter le Roux argues for a Citizen’s Income of R100 (about £10) per week per adult. He shows that even though a consumption tax increase considered by itself would be more regressive than an income tax increase, when considered alongside the establishment of a Citizen’s Income it would be progressive. The other two chapters are a translation of Anne Miller’s article on minimum income standards in the third issue of the Citizen’s Income Newsletter for 2009 and the Citizen’s Income Trust’s introductory booklet.
The chapters which advocate consumption taxes as a method of financing a Citizen’s Income give pause for thought to those of us in the UK who have for so long assumed that reduction of income tax allowances and possibly adjustment of income tax rates would be the best method. Also of interest are discussions about the labour market effects of a Citizen’s Income. If a partial Citizen’s Income is likely to provide greater employment market incentives than a full Citizen’s Income then it should be possible to find an optimum level of Citizen’s Income, though probably only from practical experience of different levels. As Dommen-Meade suggests, the long-term effects of a Citizen’s Income are more important than the short-term ones. She thinks the Swiss welfare system ripe for major change, and that a Citizen’s Income is the way to do it. ‘We are convinced …’ (p.27).
Perhaps the most significant finding is that in every European country studied a partial Citizen’s Income is found to be feasible. This raises again the question as to whether a pan-European partial Citizen’s Income might be possible. Not only would this offer all of the benefits which a Citizen’s Income in each country would offer, but it would also promote the efficiency of the European labour market, to the benefit of every European economy. The discussions of funding in the book suggest that such a pan-European Citizen’s Income should be funded by a European consumption tax collected nationally.
Such a Citizen’s Income would probably require Switzerland to join the EU: but that’s another discussion.
by Citizens' Income Trust | Apr 30, 2011 | News
Kevin Donnelly, who was an active supporter of Basic (Citizen’s) Income from its early days in the 1980s, has died at his home in Manchester aged 82. In an article by Kevin in the BIRG Bulletin in 1989 he described himself as ‘currently supply teaching, writing articles and leaflets, after a career as high-school dropout, toolmaker, clerk, sales manager, then teacher’.
Kevin was passionate about doing something to better the lives of ordinary working men and women. He expressed this through his religious belief, as well as actively promoting a Citizen’s Income in any arena available to him. In 1989 he was a founder trustee of the Basic Income Research Group, which became the Citizen’s Income Trust in 1994.
The standard definition of a Citizen’s Income is that it should be paid for by levying tax on the incomes of workers. It was unease with this aspect of Basic or Citizen’s Income that led Kevin (and me) to become involved in monetary reform. If the state reclaimed the money-creating power from commercial banks, then the proceeds could be used to fund a small Basic Income. Monetary reform used to be the preserve of cranks (and sometimes bigots as well), but it has now become urgent and mainstream following the banking crash of 2008. An important forum for the monetary reform debate is the Christian Council for Monetary Justice, of which Kevin was a long term supporter.
Kevin, always inspirational, argued with infectious good humour. His great joy was in pricking the pomposities of the hide-bound and conventional. His do-it-yourself Christmas cards with their poems and pictures were a delight. Game to the end, his wife Shirley tells me he had several recently delivered books yet to read.
by Citizens' Income Trust | Apr 30, 2011 | News
The Institute for Fiscal Studies has published Universal Credit: A Preliminary Analysis. Their researchers write: ‘Our empirical analysis in Sections 4 and 5 illustrates well the constraints all governments face when contemplating radical welfare reform. Universal Credit will strengthen financial work incentives for some, as intended, but weaken them for others. In general, incentives to work will be strengthened for the main earner in a family who works part-time or has low earnings, and will be weakened for those with higher earnings and for second earners in couples. Marginal effective tax rates will tend to fall for those on lower earnings, and rise for those on higher earnings, although this pattern also depends on how many earners there are in the family. The reform will also lead to both winners and, in the long run, losers. Because of the way the parameters of Universal Credit have been set, couples, and particularly those with children, look set to gain by more, on average, than single-adult families, particularly lone parents, who will lose on average according to our analysis. But, in general, the impact on incomes is progressive, with the bottom income deciles gaining the most as a fraction of income.’ (pp.67-8) (www.ifs.org.uk/bns/bn116.pdf)
The Institute for Fiscal Studies has reported research on the National Minimum Wage (NMW) undertaken by a team at Royal Holloway College in the University of London. They find that ‘the NMW is associated with a significant fall in wage inequality in the bottom half of the distribution’, and that in those areas where the NMW has had the largest effect on wage levels, declines in wage inequality are steeper than elsewhere. ‘While the overall effect of the NMW on employment rates averaged over its existence is neutral, [they] do find small positive employment effects from 2003 onwards. Likewise, the association of the NMW with unemployment has been negative in recent years. NMW effects on hours have been mixed, but overall there is no compelling evidence to indicate that the NMW upratings have had an adverse effect on full-time total hours of work … The areas where the NMW bit most have experienced larger falls in unemployment, particularly in the latter half of the sample period’, (Peter Dolton, Chiara Rosazza Bondibene and Jonathan Wadsworth, ‘The UK National Minimum Wage in Retrospect’, Fiscal Studies, vol.31, no.4, pp.510-532).
by Citizens' Income Trust | Apr 30, 2011 | Opinion
Vladimir Rys, Reinventing Social Security Worldwide, Policy Press, 2010, x + 126 pp, hbk 1 847 42643, £60, pbk 1 847 426406, £19.99
This book is the fruit of a lifetime of academic research and administrative experience in international social security policy. Rys worked for thirty years for the International Social Security Association (ISSA) and for half of that time as its General Secretary, and there can be few people with such a broad geographical and historical overview of the evolution of social security (here understood as financial benefits and also state insurance-funded health provision) and of the challenges facing it.
The first part of the book offers an international history of social security, a discussion of the economic and ideological context of the current debate, and some current trends:
‘… a series of shifts in emphasis on different elements in the existing structures and different roles assigned to specific actors. Thus, the state, while reducing its direct involvement in running social security schemes and providing social welfare benefits, is at the same time greatly increasing its powers when it comes to regulating occupational or private arrangements. Simultaneously, … there is an obvious shift of responsibility back to employers and different forms of occupational welfare, back to families and their supporting role, and also back to the individual and their personal capacity to save for rainy days’ (p.55)
The second part of the book builds on Rys’s previous publications on the sociological study of social security policy, and in particular discusses the ISSA’s contribution to the development of a method which goes ‘beyond the descriptive accounts of the institution as contained in legislative texts and [explains] why it is organised the way it is and why it functions the way it does’ (p.77). Such a method contributes to policy debate by suggesting which proposals might be feasible and which not. The different components of the method are discussed: the demographic, the economic, the sociological, and the political, the study of ideas, ideologies, laws, institutions and administrative techniques, and the study of the ways in which ideas are disseminated. The method is then applied to a variety of contexts, and particularly to eastern Europe ( – Rys is Czech).
The third section of the book is entitled ‘Reinventing social security in time of economic crisis: foundations of a new political consensus’ and argues for transparency about expenditures and present and future benefit levels and that only a renewed emphasis on social insurance can halt the privatisation of social security:
‘The principle of social insurance appeals partly to the rational self-interest of the individual, assuring them of access to benefits not normally attainable through private means, but also partly to their natural sentiment of solidarity and respect for other human beings’ (p.116)
As Rys suggests in his introduction, ‘it would be irresponsible, in the light of recent experience, to entrust [social insurance] to private arrangements’ (p.2).
Whilst rather too much of this book is of the ‘We did this at the ISSA’ variety, there is plenty of useful material here, and, above all, a sustained and rational argument for the importance of social insurance. However, Rys’s own career investment in the development of today’s systems leads him to neglect developments in which he has been rather less involved. It simply isn’t true that ‘no new social protection mechanism has been invented to deal with new risks and socially precarious situations’ (p.1). ‘Basic income’, ‘citizen’s income’ and ‘Child Benefit’ don’t appear in the index, and neither do ‘universal’ or ‘universalism’. Recent experience in Namibia suggests that universal provision might be precisely the new mechanism which the current crisis needs.
