Germany: Discussions on unconditional basic income

Germany: Discussions on unconditional basic income

Which analytical models exist to defend UBI, and how convincing are they? What would the introduction of an UBI mean for different parts of society? What would be the associated opportunities and risks?

To answer these, and many more questions, the Christian-Albrechts-University of Kiel has programmed a series of interdisciplinary lectures, in order to share both further directions of research and also to make some academic contributions. These academic events will happen between April 23rd and July 2nd 2019, at designated rooms and auditoriums at the University, as indicated below.

This lecture series come from various academic disciplines and touch on a broad spectrum of questions and aspects.  They will also be accessible to interested members of the public.  At the end of each 45-60 minutes paper presentation, there will be space for discussion between the authors and the audience.  The papers will be recorded and made accessible after the event.

General and increasingly extensive discussions of the reforming idea of an unconditional basic income (UBI) seem to have come to stay, especially among the younger generations. One basic income experiment after another is springing up around the world.  For the first time in Germany, the current state of Schleswig-Holstein has taken up the theme, and has introduced a ‘social security for work yet to be undertaken’ in the state parliament, alongside its coalition agreement.  So, the idea of an UBI in particular, together with the Liberal Party’s [FDP = Freie Demoktratische Partei] concept of a citizen’s wage and further initiatives, are being discussed in Germany, and trials are being conceived.

Such a UBI would definitely represent a deep intrusion into the pre-existing architecture of the welfare state, the job market, the economy, the family life of both female and male citizens, and the whole community in Germany and abroad.  The moral model of a ‘working society’, which developed alongside industrialisation and the rise of capitalism and whose scope has extended ever further in the last few decades, would be abandoned or at least significantly marginalised. That’s because UBI would change the normative way of life for every adult until retirement age, which still is paid employment. The broad distribution of material prosperity, mostly organised in accordance with the criterion of performance at work, would also change considerably.

Summary of lectures:

23rd April 2019 (Tuesday): Dr. Alexander Lorch – Philosophical reflections on an unconditional basic income.

26th April 2019 (Friday): Prof. Dr. Roswitha Ploch – Unconditional basic income – opportunities and hurdles in the political implementation of a good idea

30th April 2019 (Tuesday): Dr. Thieß Peterson – Macroeconomic effects of an unconditional basic income

10th May 2019 (Friday): Prof. Dr. Hilmar Schneider – Do we need an unconditional basic income or better Maths lessons?

17th May 2019 (Friday): Prof. Dr. Ute Fischer – Liberation or backwards roll?  Opportunities and limits of a UBI from the perspective of gender.

24th May 2019 (Friday): Prof. Dr. Gesine Stephan – Field experiments in labour market research: potential, challenges and practical examples

31st May 2019 (Friday): Prof. Dr. Ueli Mäder – Social security democratised (rather than economised)

7th June 2019 (Friday): Prof. Dr. Michael Opielka – Basic income in the labour of the future.  On the relationship between payment in cash, kind and service in the welfare state of the future.

11th June 2019 (Tuesday): Prof. Dr. Thomas Straubhaar – Unconditional basic income.  From Utopia to reality.

21st June 2019 (Friday): Prof. Dr. Nicole Mayer-Ahuja – Unconditional basic income – an emancipatory response to changes in the world of work?

2nd July 2019 (Tuesday): Dr. Manuel Franzmann – Democritisation of leisure?  Unconditional basic income from the point of view of educational theory.

Article reviewed by André Coelho

Germany: The HartzPlus experiment is starting, and the basic income discussion is there to stay

Germany: The HartzPlus experiment is starting, and the basic income discussion is there to stay

Anna, 29 – Participant in the HartzPlus experiment in Berlin, Germany

The HartzPlus experiment is starting in Germany this month. Previously summarized, the experiment will involve 250 welfare beneficiaries, subject to the Hartz IV welfare scheme. For three years, the randomly selected participants will receive 416 €/month, whether they comply with the Hartz IV conditions or not. For comparison purposes, the minimum wage in Germany is around 1500 €/month, and the poverty line stands at approximately 1100 €/month. So, just like the recent experiment in Finland, this is an test which on objective terms cannot be said to be reproducing a “basic” income, in the sense of providing the basic for achieving a minimum dignified standard of living (in this case, in Germany). Like in Finland, it is mainly testing the effects of introducing an unconditional element on the income of a group of people, for a limited period of time.

Other propositions have been vocalized in Germany, mainly in response or even as an expression of protest against the Hartz IV, enforced in the country since 2003. One of such voices has been Berlin Mayor Michael Müller, a long time Social Democratic Party (SPD) official. However, what Müller is defending, in essence, is a job guarantee, over a basic income. Beneath the “basic income based on solidarity” concept lies a fundamental distrust in Berlin’s citizens: that the latter must be coerced into municipal or social service jobs, in exchange for their “basic income” (a gross amount or around 1500 €/month). However, the proposition has been popular in Germany for a long time, with the Social Democratic Party and the Left Party having subsidized public employment in Berlin between 2002 and 2011.

While politicians and voter’s stomach for Hartz IV is running dry, after more than 15 years of enforcement, clear justification for a UBI kind of policy still seems to be lacking on the public arena. For instance, funding a basic income is still publicly presented as value of basic income times number of recipients which, of course, leads to prohibitive costs. This comes at a time when ever more studies demonstrate that providing a basic income to citizens can cost much less than that to the State on a net basis, or it can even be calibrated in such a way as to be cost neutral (by applying changes to social security schemes and taxation).

Hilmar Schneider, an economist for the IZA Institute of Labor Economics, actually thinks that creating a financial floor for poor people means spending money on all the population. Internally, he is also thinking in a “value of basic income times number of recipients” mentality, not understanding the income transfer mechanism inherent in basic income implementation. According to him, present day low paid jobs will become less attractive, which sounds reasonable to assume, since most people only accept those jobs because they are permanently threatened with destitution. What might not be so reasonable to assume, however, is to think that it may lead to price increases, and a general downward trend in income for many people. If people can accumulate a basic income with whatever income they can get from paid work, within a properly setup tax structure which incorporates basic income at its core, a rise in poverty is surely questionable.

More information at:

David Martin, “Berlin mayor calls for basic income in Germany – or does he?”, DW, March 20th 2018

Arthur Sullivan, “Germany’s “money for nothing” experiment raises basic income questions”, DW, 28th February 2019

André Coelho, “Germany: The first basic income experiment in Germany will start in 2019”, Basic Income News, 16th December 2018

Germany: The first basic income experiment in Germany will start in 2019

Germany: The first basic income experiment in Germany will start in 2019

Basic income is going to be tested in Germany. The setup of the experiment will be similar to the one now ending in Finland, which means there will be an unconditional cash transfer to 250 randomly selected people among those already receiving benefits (250 others will act as the control group), and evaluate the impact in terms of labor market behavior, health and social relations.

 

Behind this initiative, to be initiated in May 2019, is the Sanktionsfrei organization, a non-profit managed by volunteer professionals from administration, IT-tech, communications and law. Sanktionsfrei (meaning “free from sanctions”), with headquarters in Berlin, specializes in helping sanctioned citizens by the Hartz IV social security system in Germany. It will conduct this experiment in Berlin, for a 3-year period, accepting volunteers who may apply for it through their website.

 

The basic income pilot, named HartzPlus, will be conducted as a scientific experiment, led by professor Rainer Wieland, from the Bergische Universität Wuppertal. The Sanktionsfrei team and professor Wieland are about to test a different approach to social security than the one applied in Germany at the moment (Hartz IV system), which has been reported as intrusive, bureaucratic and aggressive (sanctions). Those characteristics, contrary to what is considered by the system’s defenders, do not lead to increased willingness to pickup paid work (the objective of the program), but to resistance, decreased motivation and a generalized discredit in the social security system. Throughout the experiment, people will be checked for variations in mental health, life control, self-efficiency, sociopolitical values, among other indicators. No initial hypothesis will be considered; the experiment aims to offer scientifically informed insights to future social policy in Germany.

 

As for financing, Sanktionfrei is relying on private donors as the sole financing mechanism. Participants will receive unconditionally the amount from whatever sanctions they will be subject to by job centers (e.g.: by not responding to certain job offers or refusing to get suggested training actions); Sanktionsfrei will always try to recover the sanction money through legal action, and if it does, the participant will transfer the contested amount back to Sanktionsfrei. Otherwise, each participant gets, for the whole time period of the experiment, the full amount of their social security benefits, no questions asked.

 

 

More information at:

Tobias Kaiser, “Grundeinkommen wird in Deutschland getestet [Basic Income is tested in Germany]”, Gründerszene, December 6th 2018

André Coelho, “Finland: Going through a basic income experiment”, Basic Income News, April 20th 2018

HartzPlus website

Europe: New UBI Research from CESifo

Europe: New UBI Research from CESifo

Photo by Stefan Kühn, CC BY-SA 3.0

The CESifo Group of Munich is a European research group that seeks to employ both high-quality economic theory and the methods of an empirical institute. Operating since 1999, CESifo is a collaboration between the Center for Economic Studies (CES), the ifo Institute (“Information and Forschung” or research), and the CESifo GmbH (Munich Society for the Promotion of Economic Research).

CESifo publishes a quarterly journal, the latest issue of which is devoted to Unconditional Basic Income (UBI).  Five of seven pieces within this 48-page publication present a variety of perspectives on UBI research and theory, predominantly addressing the European context.

  1. Straubhaar, Thomas, “Universal Basic Income – New Answer to New Questions for the German Welfare State in the 21st Century”, CESifo Forum 19 (3), 2018, 03–09 | DetailsPDF Download

The focus: Transforming social support in Germany by replacing Bismarckian welfare state ideals

Straubhaar describes a series of proximate social and economic changes due to globalization, aging societies, income polarization, and dissolution of traditional economic safety nets. He comments that the contemporary version of the welfare state is founded upon 19th century Bismarckian principles that rely on a classic population pyramid (weighted by youth at the bottom), a male-breadwinner model, a fast-growing economy, and a labor-focused Protestant work ethic, none of which will continue to be relevant indefinitely. He proposes UBI as a welfare state model that would completely replace all other publicly financed social support and provide a 21st century solution to the aforementioned changes, particularly in Germany, but as a model for the rest of the world.

  1. Torry, Malcolm, “Some Lessons from the Recent UK Debate about Universal Basic Income”, CESifo Forum 19 (3), 2018, 10–14 | DetailsPDF Download

The focus: Enhancing UBI data distribution and ensuring that discussions maintain a clear definition of the difference between UBI and other related economic policies

Torry highlights a number of key events and issues from the UK that have broader relevance for the global community interested in UBI. The first discusses the important use of microsimulation to predict the impact of economic policies on households of varying incomes (for example, to estimate the loss of disposable income to low-income families if means-tested benefits remain or are removed). The second relates a story in which a public organization cherry-picked UBI data, to which Torry simply says that high-quality research ought to be better distributed. The third and fourth call the reader’s attention to the importance of using specific definitions of UBI schemes and not allowing the term to be misused.

  1. De Wispelaere, Jurgen, Antti Halmetoja and Ville-Veikko Pulkka, “The Rise (and Fall) of the Basic Income Experiment in Finland”, CESifo Forum 19 (3), 2018, 15–19 | DetailsPDF Download

The focus: Improving the international understanding of Finland’s basic income experiment, its origins, and its limitations

The Finnish basic income experiment began as a one-line commitment in the national Government Programme in 2015. Kela, the Finnish Social Insurance Institution, proposed several experiment design options, and a two-year control trial began in January 2017. Kela will evaluate the results and present them to Parliament in 2019.

Basic income stakeholders have become increasingly critical of the trial parameters, raising concerns about the limits of the sample and the pilot’s restricted scope and goals. The authors argue that proponents of UBI initially overstated the extent of the Finnish government’s commitment and capabilities, heralding the commitment as a “watershed” moment for European basic income, when in fact the Finnish experiment and others have been limited from the outset by policy inertia, existing budgetary and taxation systems, and other institutional limitations. The pilot program is designed to assess basic income as a means of activating the labour market, a politically safe goal, and was never likely to result in policy changes of the kind UBI advocates desire to see.

  1. Colombino, Ugo and Nizamul Islam, “Basic Income and Flat Tax: The Italian Scenario”, CESifo Forum 19 (3), 2018, 20–29 | DetailsPDF Download

The focus: Evaluating proposed basic income-related policy packages in Italy and comparing their political origins

Like other European countries, Italy has seen several basic income proposals that have yet to be implemented. Several current potential models are rooted in different political ideologies and thus provide an interesting comparison. The first, “Reddito di Inclusione,” (RdI) is a basic income scheme that targets the most impoverished segment of the population in practice but is intended to be universal. The second, “Reddito di Cittadinanza” (RdC) is means-tested and only covers the population “below the relative poverty threshold” (20). Another model, proposed by Istituo Bruno Leoni (a think tank), involves both basic income and a flat tax.

The authors provide a basic overview of the differences between UBI, means-tested guaranteed income, and negative income tax. They then simulate and evaluate the various government-proposed combinations of policies, concluding that while it is possible to design a fiscally neutral policy package, current government proposals have not yet done so.

  1. Widerquist, Karl, “The Devil’s in the Caveats: A Brief Discussion of the Difficulties of Basic Income Experiments”, CESifo Forum 19 (3), 2018, 30–35 | DetailsPDF Download

The focus: Making UBI research accessible and understandable, particularly with regard to its limitations

Widerquist’s basic thesis is that, contrary to popular representations of policy research, all UBI experiments contain a significant list of caveats. He argues that science journalism has not done an adequate job of communicating the limitations of UBI studies, or indeed any social sciences research, to the public. Furthermore, specialist researchers’ lists of caveats are inadequate for communicating a study’s limitations. Widerquist has an upcoming book that will address both best practices in UBI research given its inherent difficulties and best practices in communication the results of said research to the public and policymakers. In this article, he identifies four broad strategies: (1) iteratively designing studies with public feedback, so that research directly addresses the questions relevant to local stakeholders; (2) highlighting UBI’s impact in publications, rather than its side-effects (even though the latter might be more interesting to researchers); (3) attempting to define a “bottom line” or generalizable conclusion from research; and (4) addressing and discussing ethical controversies.

  1. Clauss, Michael and Stefan Remhof, “A Euro Area Finance Ministry – Recipe for Improved Governance?”, CESifo Forum 19 (3), 2018, 36–43 | DetailsPDF Download

The authors discuss the possibility and potential function of a euro-area finance ministry. Such an organization could either martial Europe’s national fiscal policies to align them throughout the region, or it could be one more “layer” of fiscal authority in each European nation. This paper does not explicitly address UBI.

  1. Nam, Chang Woon and Peter Steinhoff, “The ‘Make in India’ Initiative”, CESifo Forum 19 (3), 2018, 44–45 | DetailsPDF Download

The authors discuss a 2014 federal initiative to promote industrial manufacturing in India. This paper does not explicitly address UBI.

More information at:

“CESifo Forum 03/2018 (Autumn): Unconditional Basic Income”, 01-48, ifo Institute, Munich, 2018

 

 

Frankfurt, Germany: GLS Bank and Bündnis Grundeinkommen Hessen invite prof. Sascha Liebermann

Frankfurt, Germany: GLS Bank and Bündnis Grundeinkommen Hessen invite prof. Sascha Liebermann

On the 9th of October 2018, at 6 pm, professor Sascha Liebermann will speak at the GLS Bank in Frankfurt. The event is organized by the Bündnis Grundeinkommen Hessen (Hesse Basic Income Alliance) political party and is expected to last for around two hours.

General description of the event:

Unconditional basic income (UBI) is a monthly amount of money which is sufficient for your existence, unconditional and for everybody. The UBI is a polarising idea for most groups in society. Opponents fear that  the principle of pay-for-performance will be undermined. Others think that the UBI will weaken social justice, because the existing social welfare state will disappear. Supporters of UBI claim that it will be an effective mechanism to create a humane working environment, in a time of increasing digitalisation of work. Above all, supporters claim that UBI gives the opportunity to free human beings from an economic straight-jacket and existential threats, allowing all members of society to prosper and develop their own potential.

The GLS Bank in collaboration with the ‘Bündnis Grundeinkommen Hessen’ party has invited Professor Sascha Liebermann from the ‘Alanus Hochschule für Kunst und Gesellschaft’ near Bonn as guest speaker.  The purpose is to explore the concept and discuss with the audience the risks and opportunities of UBI.