The Swiss village of Rheinau is being targeted for a basic income experiment. The idea is being promoted and produced by the Dorf Testet Zukunft organization (Village of the Future Test). It started in 2016, through a popular initiative, and it had already been approved by more than 25% of the Reinhau population, at the time. Although Reinhau is only habited by 1300 people, 813 have already registered for the experiment. That is above what the organization needed for starting funding, which was 651 registrations.
The basic income test itself is planned to start as early as 2019, given enough funding is secured, which starts now. The Dorf Testet Zukunft will have to raise over 5 million Swiss Francs (4,4 million Euros). The plan is for this amount to be distributed unconditionally to all registered participants, for a year. The money will be distributed according to age, such that until 18 years old children receive 550 €/month, the 18-22 years old bracket receive 1100 €/month, from 22 to 25 years old 1640 €/month and above that a 2190 €/month stipend is specified. According to the organization, income from other sources will be discounted over the basic income, up to its maximum value. However, no one will be left with less income than presently, and all people with less income than the basic income value will have more than before (during the experiment). The exact and appropriate experimental mechanism and values are in accordance with villagers and the local council, since the project is open to comment and contributions from all involved.
Dorf Testet Zukunft’s team is composed by several dedicated people, headed by project initiator and filmmaker Rebecca Panian, Reto Ormos (financial expert) and Reda El Arbi (Communications), among others. There is also a scientific team dedicated to the project, including Jens Martignoni (FleXibles), Aleksandra Gnach (linguistics professor at ZHAW), Theo Wehner (ETH Zurich) and Sascha Liebermann (Alanus Hochschule). Other support come from activists like Daniel Häni, Götz Werner and Enno Schmidt.
Funding is planned to be done through a crowdfunding process, using Wemakeit, a crowdfunding platform founded in Switzerland in 2012. Data is to be collected from recipients during its duration, with a focus on answering general questions such as “What happens to the people?” and “What happens in the community?”, and analyzed afterwards. A documentary film is also planned, directed by Rebecca Panian, which main drive is a search for an answer for “how we want to live in the future”.
The idea is, in a nutshell, can be condensed in the following words written in the Dorf Testet Zukunft’s website:
“We want to test a possible new future as realistic as possible. This requires pioneers who dare and try it out. Best case: we can encourage people to discuss about the idea of the basic income because we are convinced that a system change must come from the people. Not prescribed from a government.”
More information at:
Dorf Testet Zukunft website
What’s the Buzz from Rheinau?
Earlier in the month, headlines made such proclamations as “Swiss municipality to offer guaranteed income” (SWI), “Swiss village considers a crowdfunded basic income for all inhabitants” (Toronto Star), and “Swiss town set for universal basic income experiment” (The Local Switzerland), referring to Rheinau, a town of about 1300 people in the north of the country.
To preclude misunderstanding about what is happening in Rheinau, it should be stressed that the village is not enacting a basic income, nor is its government deliberating an implementation of the policy, nor is it running a state-sponsored trial. Moreover, to avoid possible confusion, it is specifically worth noting that this latest news from Rheinau is unrelated to previously reported discussions of basic income pilots by Swiss political bodies, such as the investigation of municipal basic income pilots initiated last year in nearby Zurich.
Instead, the news is this: the city council has agreed to permit an independent filmmaker Rebecca Panian to make the village the site of privately funded one-year trial of a program similar to basic income, involving at least half of the town’s population, which would serve as the basis for a documentary. The project’s main purpose is to provoke interest, discussion, and further research into the idea of basic income.
While the village’s council has given the green light to the documentary project, the ultimate execution of the project remains contingent on enrolling the desired number of participants and raising sufficient funds. Moreover, the design and duration of the trial remains liable to change during the course of discussion with the local council and inhabitants of Rheinau.
The Payment Scheme: Unconditional, Subject to Repayment
If the trial does come to fruition as currently planned, it will not, strictly speaking, test a basic income: participants in the trial over the age of 25 will be given a cash payment of 2500 Swiss francs (CHF) (about 2151 EUR) at the start of each month, with reduced amounts given to minors and young adults, irrespective of income, household status, work, or need; however, if participants receive additional income during the month, they will be expected to repay this money in part or full.
Stated otherwise, participants over age 25 will be granted 2500 CHF at the start of each month, but will be permitted to keep only as much as necessary to ensure that their total income for the month is at least 2500 CHF (with lower amounts for younger age groups). If they earn above 2500 CHF, they will repay the entire amount of the grant.
To many, this feature of the design might cause the project to seem not a test of basic income at all; after all, according to the Basic Income Earth Network, a basic income is by definition delivered without means test. For the project’s initiators, however, the repayment requirement is a way to attempt to more accurately simulate what a basic income would feel like if actually implemented in Switzerland, where many individuals, earning high salaries, would presumably “repay” any amount paid out as a basic income in personal income taxes. “[It] is important to us not to spread the illusion that an unconditional basic income simply means more money in your pocket,” Panian tell Basic Income News, “It just means that the basic income is unconditional. Everybody gets it so nobody needs to fear angst (existenzangst) again.”
Since the cash allowance is paid upfront, the plan is distinct from a negative income tax or top-up scheme in which individuals are “reimbursed” if there earned income falls below a certain threshold. One might say it loosely resembles a basic income accompanied by an increase in individual income tax.
That being said, this provisional design has not been set in stone, and documentary team will consult with residents of Rheinau later in the year to produce a finalized design.
Motivation: “Too Many Questions Unanswered”
Like many in both Switzerland and abroad, Panian first heard about basic income when a referendum to enact the policy was put on the ballot in the 2016 Swiss general elections. Although the referendum left open the amount of the basic income — it stated only, “Legislation will determine the funding for the system and the actual amount of the basic income” — a monthly payment of 2500 CHF was often discussed during the campaign.
Celebrating 23% Yes referendum vote, CC BY 2.0 Generation Grundeinkommen
Panian was intrigued by the idea as a possible solution for challenges posed by the future of work. In her view, a society based on the goal of full employment is unsustainable in the face of accelerating automation, and attempting to maintain such a system will result in “mass unemployment and lots of people with no money, no support, and no perspective.”
At the same time, she was not surprised that the referendum failed at the ballot box, telling Basic Income News, “there were too many questions unanswered, and in the mind of many people this idea remained a crazy, non-realistic vision.”
Panian herself does not express certainty that basic income is the new system needed by Switzerland and other nations facing the threat of automation, but she believes that “we better test it as well as we can before we throw it in the bin and do nothing.”
This goal — opening people to the idea of basic income as a serious proposal — provided the motivation that would ultimately lead the filmmaker to Rheinau: “I figured out that in order to become more open to the idea, people need more time, and they need to ‘see’ it happening. That’s how I came up with the idea to start a test it in a village. … Everybody who watches the experiment going on in a village can sympathize with the villagers and with that get more connected with the idea.”
The Village: A “Mini-Switzerland”
Other privately financed and administered “basic income” projects, including Germany’s lottery-style Mein Grundeinkommen and the in-progress US documentary Bootstraps, have focused on individual-level effects of unconditional monthly cash grants.
Like the directors of Bootstraps, Panian hopes to document the lives of individual participants in the Rheinau project. But Panian is also interested in the community-level impact of a basic income, and for this reason decided to situation her study in small village in which the majority of residents would be able to take part.
Rheinau Abbey, CC BY SA 3.0 Hansueli Krapf
Panian first announced her plans in January of this year, putting forth a call for Swiss municipalities to serve as the site of the documentary. In some cases, city councils placed bids to be the site of the basic income test. In others, individual residents wrote to Panian to nominate their own communities.
Panian ultimately selected Rheinau out of more than 100 applicants, in part on the basis that its demographic structure reflects Switzerland as whole. As she describes it to Basic Income News, the community is “small but like a mini-country.”
According to Panian, Rheinau was also a favorite due “fantastic communication with the local council” and the council’s “real interest in the experiment.” Neue Zürcher Zeitung reports that the village rejected the country’s basic income referendum with 72% no vote in July 2016, but that its mayor and councilors have been receptive to involving the community in a small-scale test of a similar program. In a statement quoted on the official website of the planned documentary, the council declares that basic income “deserves to be tested” and “encourage[s] the population to participate” in the trial and film project.
The Research Team
In addition to Panian, a team of social scientists — including an economist (Jens Martignoni), organizational psychologist (Theo Wehner), linguist (Aleksandra Gnach), and sociologist (Sascha Liebermann) — is fronting the basic income project in Rheinau.
The four scientists are currently designing a study about of the effects of the program on the community. However, as Martignoni stressed in correspondence with Basic Income News, the research project is in an early stage of development, and it is too early to tell what can be learned from the trial.
In addition to assessing the effects of the program on the well-being of participants and the community, the researchers hope to examine its effects on their opinions on basic income itself. Liebermann tells Basic Income News, “I am curious to find out how the people in Rheinau think about the basic income and how their thinking about it might change during the trial and in what direction,” which he plans to investigate through in-depth interviews.
Like Panian, both Martignoni and Liebermann emphasize that cooperation with the local community is an important aspect of the Rheinau experiment, in contrast to other past and ongoing trials of basic income and negative income tax, with the people of Rheinau to themselves be included in the development of a final model. The researchers also emphasize that the Rheinau project is unique in that its goal is not to fight unemployment or poverty.
Basic Income in a “Rich Country”
In regions where governments are currently sponsoring or overseeing trials of basic income or other income guarantees — including Finland, the Netherlands, Ontario, Barcelona, and Stockton — the main objective is to address unemployment or poverty.
Generation Grundeinkommen demonstration, CC BY-NC 2.0
While Switzerland is not without poverty, it is known as a relatively wealthy nation. The median salary was reported in 2015 as 6189 CHF per month, and the average household income was reported in 2017 at 6957 CHF per month. According to the Federal Statistical Office, only 10% of people living in Switzerland have a monthly disposable income below 2243 CHF — suggesting that relatively few might stand to benefit from a monthly 2500 CHF grant subject to repayment.
Panian herself believes that, for this reason, a Swiss experiment would have the potential shed a fresh perspective on the basic income debate, “Switzerland is famous as a ‘rich’ country. If we test it, we don’t do it primarily to fight unemployment or poverty.” Martignoni also points out that the trial planned in Rheinau would be unique among basic income experiments as one that is “not restricted to a poor part of the population but to all in a developed (‘rich’) country.”
That said, if the filmmaker believes that main reason to implement basic income in rich nation like Switzerland would be as a sort of insurance against future automation and digitization, then one might wonder what impact she hopes or expects to observe during a one-year trial in 2019. Indeed, if it most Swiss workers are already earning well above 2500 CHF per month, one might wonder if the trial will have any effect on participants (except, perhaps, the minor inconvenience of the required monthly repayments). Asked about this concern, Panian noted that, while very few Swiss men have monthly salaries below 2500 CHF, a significant proportion of women still lack their own income. Since the benefit will be paid on individual rather than household basis, women without a personal income will be able to keep the entire monthly payment. Thus, Panian predicts that families with children and stay-at-home mothers will be prime beneficiaries.
She adds, however, that individual monetary benefits are not, in her view, the only “benefit” of basic income: “I talked to many people, and it became obvious that most of them only think about how they could or would not profit on a monetary basis from the basic income. What they seem to forget is that if you live in a society where people don’t have to fear for their basic needs, they might get more content, and this will have a positive effect on the whole community.”
In any case, the discussion of potential benefits to Rheinau itself should not obscure the fact that, for the team behind the trial, the major goal is not to produce measurable results but to reinvigorate discussion of basic income in Switzerland and beyond. According to Panian, the best case scenario is one which the project “inspires others to organize more experiments on their own in their communities and motivates people to think about what future they want.”
Enno Schmidt, the filmmaker behind an earlier basic income documentary and cofounder of the referendum campaign, agrees that the greatest promise of the project is to catalyze further discussion: “it is one first fresh new activity after the referendum; it keeps the topic in Switzerland a little awake. It encourages other communities to think about whether or not they will also introduce a basic income on a trial basis.”
For more information and updates on the Rheinau basic income project, see https://www.dorf-testet-zukunft.ch/page1.html.
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Article reviewed by Patrick Hoare.
Cover image: Rheinau, CC BY-NC 2.0 Wisi Greter
Michael Strobaek, Global Chief Investment Officer (CIO) of Switzerland’s second largest bank Credit Suisse (CS), is interviewed in the December 2017 issue of CS’s “Bulletin“, dedicated to questions around aging. According to Strobaek, it will be crucial to secure the livelihood of the millions of people who will be unemployed through technological development, automation and robotization, and that this has to be done through some sort of unconditional basic income (UBI). Although Strobaek has not provided any specifics about UBI, he is clear that it is required by future unemployment. This future unemployment, however has not been proven as a fact. Despite often cited reports, there is still no proven link between automation and net job loss, since these reports focus on job destruction, not job creation. For an alternative view, that finds that new technology will create new jobs as well as destroying old ones, see Ursula Huws’ article.
Asked who would be supposed to pay for the UBI, Strobaek answers: “The taxpayer. But the question then becomes just what is being taxed? Bill Gates proposed a robot tax to replace the income tax and social security contributions that will be lost through automation. As a society, we still need to find answers to this question.” But according to Strobaek the main challenge relates to future possibilities for human activities when there is very little paid work left. He suggests that “the structures of the world of work will need to be replaced by individual and self-selected structures. Intrinsic motivations will replace extrinsic ones. (…) When people have material security, then they will be able to become involved in the care of older people or of children”. This, however, seems to be in conflict with a deep job-centered logic that he defends throughout the interview, alongside a defence of large families, fearing for population and social security system decline.
Although Strobaek’s interview supports UBI, there is no information indicating whether this is the view of the CS board of directors, or of CS in general. Big banks do not usually publicize particular positions or make their own proposals, except about taxation and regulation within their own framework or on behalf of their clients, since they are doing business with a wide variety of clients, who support all political orientations. There is also no evidence in the interview of an alternative view to Strobaek’s support for UBI. This is consistent with the fact that large financial institutions are generally not criticized in any way in Switzerland, except at times by the political Left.
More information at:
“The New Old Age“, Credit Suisse Bulletin 4th Trimester 2017
Ursula Huws, “The future of work“, personal blog, January 29th 2017
This article was updated by André Coelho and reviewed by Malcolm Torry.
Billionaire businessman Johann Rupert, chairman of Swiss luxury goods company Richemont and South African investment holding company Remgro Limited, has recently been speaking in favor of basic income.
In March, Rupert spoke to the Swiss economic newspaper Finanz und Wirtschaft about the state of the Swiss watch industry. While the interview mainly focused on this specific industry and Rupert’s company Richemont, it eventually turned to some more general questions.
Asked about his biggest worries for the future of the economy, Rupert mentioned growing inequality and threat of job losses due to automation; in his view, such social and economic changes would intensify political extremism and hatred in society.
When then questioned about potential solutions, Rupert brought up basic income, stating, “In order to mitigate the job losses through automation, we will have to talk about forms of unconditional basic income [German: Formen eines bedingungslosen Grundeinkommens].”
In May, Financial Times reported that Rupert had told journalists, “I’m a proponent of universal basic income. We have to give time to people to re-skill themselves for a new economy.”
According to Forbes, Rupert is Africa’s fourth richest person.
Mark Dittli and Pascal Meisser, “Die Lage in China hat sich normalisiert,” Finanz und Wirtschaft, March 24, 2017. (In German)
Ralph Atkins, “Richemont founder backs universal basic income,” Financial Times, May 12, 2017.
Reviewed by Asha Pond
Photo: Montblanc Watches (a subsidiary of Richemont), CC BY-NC-ND 2.0 antefixus21
Financing Basic Income: Addressing the Cost Objection, edited by Richard Pereira (University of Birmingham, UK), is the latest addition to the Palgrave Macmillan series Exploring the Basic Income Guarantee.
Contributors include Pereira, Albert Jörimann (Basic Income Earth Network, Switzerland) and Gary Flomenhoft (University of Vermont, USA; University of Queensland, Australia).
This Palgrave Pivot argues that basic income at a decent level is, in fact, affordable. The contributors approach the topic from the perspectives of three different countries—Canada, Switzerland, and Australia—to overcome objections that a universal program to keep all citizens above the poverty line would be too expensive to implement. They assess the complex array of revenue sources that can make universal basic income feasible, from the underestimated value of public program redundancies to new and so far unaccounted publicly owned assets.
1. Introduction by Richard Pereira
2. “Foundations for a Basic Income Guarantee: Affordability through Program Redundancies” by Richard Pereira
3. “Cost Feasibility of Basic Income in Europe: A Financing Case Study from Switzerland” by Albert Jörimann
4. “Building up BIG: Land Rent in Australia as a Significant Financing Source” by Gary Flomenhoft
5. Conclusion by Richard Pereira
Photo: CC BY 2.0 FuFu Wolf