Are work and a guar­an­teed basic income mutu­al­ly exclu­sive or do they have a future together?

The future of work is going to be char­ac­terised by key­words, such as big data, automa­tion, stan­dard­i­s­a­tion, job loss­es, the gap between rich and poor, the crum­bling of the social mar­ket econ­o­my and many more sim­i­lar terms. Is an uncon­di­tion­al basic income the key to inno­va­tion, an increase in GDP, and a new type of human and social coex­is­tence? Does an uncon­di­tion­al basic income real­ly finance itself because sav­ings in admin­is­tra­tion and increased pro­duc­tion due to automa­tion can then cov­er the expens­es? Who is going to pock­et the bill for an uncon­di­tion­al income? The state or the wealthy elite ‑anal­o­gous to the “Giv­ing Pledge”?

In a con­tin­u­a­tion of her Duet inter­views, Dr Cal­daro­la, author of Big Data and Law, talks to soci­ol­o­gist Prof. Dr Jür­gen Schupp, co-author of the recent book “Basic Income – From the Vision to the Creep­ing Wel­fare State Trans­for­ma­tion” ¹, about the par­a­digm shift regard­ing uncon­di­tion­al income in the dig­i­tal age.

You teach and con­duct research on the con­cept of an uncon­di­tion­al basic income and coor­di­nate a pilot project with the aim of empir­i­cal­ly test­ing the fea­si­bil­i­ty of a basic income. Around 290,000 pri­vate indi­vid­u­als have made dona­tions to finance a month­ly uncon­di­tion­al basic income for 122 recip­i­ents for a peri­od of three years. These are pay­ments totalling 5 mil­lion euros that are being redis­trib­uted with­in soci­ety. Before we start, could you briefly intro­duce our read­ers to the idea of an ​​uncon­di­tion­al basic income? Where did it come from and who came up with the con­cept? What does an uncon­di­tion­al basic income mean? What advan­tages and dis­ad­van­tages does it offer and what devel­op­ments or trends can we observe at the glob­al level?

Prof. Dr Schupp: The first demand for a guar­an­teed income appeared in Thomas More’s nov­el Utopia, more than 500 years ago. In 1797, Thomas Paine, one of the found­ing fathers of the basic income debate, put it this way: “It is pro­posed that the pay­ments, as already stat­ed, be made to every­one, rich or poor. It is best to do so to avoid envi­ous dis­tinc­tions. It is fur­ther right that it ought to be so, because it takes the place of the nat­ur­al inher­i­tance, which is every man’s right over and beyond prop­er­ty which he has acquired or inher­it­ed from peo­ple who acquired it. Any­one who does not wish to accept it may throw it into the com­mon fund”.²  The edi­tors of a notable his­tor­i­cal overview of the basic income, Philip Kovce and Birg­er P. Prid­dat, clas­si­fy the pro­pos­al of the native Eng­lish­man and hon­orary French cit­i­zen Paine as an alter­na­tive to the wel­fare sys­tem for the poor which is what was known at the time and to the social secu­ri­ty sys­tem, which only devel­oped in Ger­many 100 years lat­er. The authors saw this pro­pos­al as a basic secu­ri­ty that ensured that every­one should be pro­vid­ed with a one-off share cap­i­tal upon enter­ing adult­hood and lat­er with a reg­u­lar basic pen­sion.³

An uncon­di­tion­al basic income grants every cit­i­zen of a coun­try a per­ma­nent and indef­i­nite (life­long from the per­spec­tive of the indi­vid­ual) basic income that ensures every indi­vid­ual a liveli­hood – and pre­vents pover­ty and thus enables social par­tic­i­pa­tion. Such a legal enti­tle­ment would exist with­out there being a pri­ma­ry oblig­a­tion to be gain­ful­ly employed or oth­er sim­i­lar oblig­a­tions- with­out hav­ing to rely on exist­ing per­son­al or fam­i­ly income or assets of a spouse or oth­er depen­dent persons.

In this debate, it is impor­tant to dis­tin­guish between an uncon­di­tion­al basic income which is meant to com­bat hunger and absolute pover­ty and is to be imple­ment­ed in less eco­nom­i­cal­ly devel­oped coun­tries. In eco­nom­i­cal­ly devel­oped indus­tri­al and wel­fare states, how­ev­er, it is intend­ed as an alter­na­tive or sup­ple­ment to exist­ing social secu­ri­ty sys­tems and is to be intro­duced as a gen­er­al civ­il right. The fight against pover­ty is not the main issue here. Rather, the reduc­tion of (social) bureau­cra­cy and the sep­a­ra­tion between gain­ful employ­ment and income secu­ri­ty and the intro­duc­tion of a new civ­il right become more impor­tant in this debate.

We cur­rent­ly have a world pop­u­la­tion of 8 bil­lion peo­ple and are well on the way to reach­ing the 10 bil­lion mark. How many peo­ple would ben­e­fit from an uncon­di­tion­al income? What would hap­pen to the bil­lions of peo­ple liv­ing in pover­ty who have no edu­ca­tion? Are they all to receive an uncon­di­tion­al income?

Uncon­di­tion­al basic incomes are intend­ed as a per­ma­nent and indef­i­nite pay­ment on the part of the state to secure the liveli­hood of cit­i­zens. Pay­ing every­one an uncon­di­tion­al basic income at the glob­al lev­el is some­thing we are far from achiev­ing but which is worth striv­ing for and yet can­not alle­vi­ate the real prob­lems of the world. You address the prob­lem of pover­ty. When it comes to pover­ty – that is, peo­ple dying of hunger because they are unable to feed them­selves – I do indeed see a need for action. World Bank field exper­i­ments on this top­ic show that an uncon­di­tion­al direct pay­ment to peo­ple liv­ing in extreme pover­ty in less devel­oped coun­tries is a supe­ri­or alter­na­tive for tack­ling hunger to tra­di­tion­al forms of devel­op­men­tal aid, where funds are paid in lump sums to states that use and dis­trib­ute these funds at their own discretion.

In Ger­many, we also know what pover­ty means and, as a legal right, we know that the state grants a basic wage such as Hartz IV, social assis­tance and basic secu­ri­ty in old age. How­ev­er, an uncon­di­tion­al income would not be lim­it­ed to those peo­ple who are affect­ed by finan­cial need or who either must or can turn to the state because of their pover­ty. Indeed, even the wealthy would receive an uncon­di­tion­al basic income. The advan­tage of an uncon­di­tion­al basic income with regard to pover­ty would be that all those poor peo­ple who, out of shame or oth­er rea­sons, do not vis­it the author­i­ties today and do not sub­mit an appli­ca­tion would also be includ­ed. This is the so-called hid­den pover­ty that we know in Ger­many and that is miss­ing in today’s sta­tis­tics. This phe­nom­e­non of hid­den pover­ty would be vir­tu­al­ly elim­i­nat­ed by an uncon­di­tion­al income, since the jour­ney to claim ben­e­fits from a gov­ern­ment agency would be a thing of the past. 

Should Indus­try 4.0 become a real­i­ty in indus­tri­alised nations, mean­ing achiev­ing the next step in automa­tion, the pro­duc­tion of goods and ser­vices would become so effi­cient and cost-effec­tive that not only the indus­tri­alised but also devel­op­ing coun­tries, such as African nations, could be sup­port­ed with a sys­tem of. uncon­di­tion­al basic income pay­ments. Feed­ing peo­ple is not a mat­ter of resources. Rather, it is pri­mar­i­ly a prob­lem of dis­tri­b­u­tion – an asym­me­try between the high­ly devel­oped rich coun­tries and the less devel­oped coun­tries. As a result, we still have a high per­cent­age of pover­ty. We, mean­ing the UN but also Ger­many, have com­mit­ted our­selves to achiev­ing so-called sus­tain­able devel­op­ment goals – includ­ing the fight against glob­al pover­ty – by the year 2030. We have been very suc­cess­ful since the sign­ing of the agree­ment in ques­tion – at least until the out­break of Covid, when the pos­i­tive devel­op­ment trend reversed again. Instead of falling pover­ty num­bers, we are now see­ing ris­ing num­bers again. This shows how dif­fi­cult it will be to achieve this goal by 2030.

The Tay­lorism asso­ci­at­ed with work and thus par­tial automa­tion already began with the indus­tri­al rev­o­lu­tion. With the use of dig­i­tal tech­nolo­gies, automa­tion is pro­gress­ing even more because machines and dig­i­tal tools are tak­ing over the labour of many work­ers in greater num­bers than ever before. The “remain­ing” work that peo­ple can still do will be in par­tic­u­lar areas, such as nurs­ing, or will require spe­cif­ic cross-dis­ci­pli­nary skills that only a small num­ber of peo­ple will be able to pro­vide. Is an uncon­di­tion­al income the solu­tion for the many unem­ployed of the future?

I would view that in a more nuanced way. An uncon­di­tion­al basic income would, at least for a while, alle­vi­ate wor­ries about the future for those who are affect­ed by tech­no­log­i­cal progress and who might lose their jobs in the future. Peo­ple actu­al­ly want to keep their jobs. They want to earn fur­ther qual­i­fi­ca­tions and gain social recog­ni­tion by being employed and work­ing. They there­fore would want to do the jobs that are no longer avail­able and com­pen­sate by tak­ing on new ones. Empir­i­cal stud­ies on tech­nol­o­gy (e.g., AI) and work devel­op­ment show that it is less a mat­ter of entire class­es of jobs being elim­i­nat­ed than indi­vid­ual areas of a job. These stud­ies also show that employ­ees have oppor­tu­ni­ties for fur­ther devel­op­ment over the course of their careers; this also includes being able to sum­mon up the courage to choose a path to self-employment.

For those jobs where entire types of activ­i­ties are lost because com­pa­nies are no longer viable on the mar­ket and are no longer com­pet­i­tive, an uncon­di­tion­al income would help to deal with the spec­tre of unem­ploy­ment. But mon­ey alone does not guar­an­tee peo­ple new fields of employ­ment. At this point, we need a more effec­tive mech­a­nism that, on the one hand, reduces the fear of finan­cial col­lapse and, on the oth­er hand, cre­ates incen­tives for peo­ple to invest in activ­i­ties or pro­fes­sion­al fields and get set for the future. Those are our future tasks and here the state must take on a sup­port­ing and guid­ing role.

In a pre­vi­ous inter­view with Daniel Goeude­vert, it was said that the free­dom to choose good or evil in the dig­i­tal age was being reduced by the appli­ca­tion of big data, algo­rithms, AI… as well as by the pres­ence of an infor­ma­tion over­load and the use of agno­tol­ogy. This state­ment was jus­ti­fied by the fact that peo­ple hard­ly seem to be in a posi­tion to under­stand dig­i­tal process­es any­more, par­tic­u­lar­ly giv­en that they are not real­ly trans­par­ent any­way. As a result, it is dif­fi­cult for peo­ple to assume respon­si­bil­i­ty, if they can hard­ly form their own judg­ments. Is an uncon­di­tion­al income a solu­tion for increas­ing the scope of the free­dom of choice and inde­pen­dence again? Or to put it anoth­er way: If I receive an uncon­di­tion­al income, am I then free and no longer depen­dent on an employer?

In a world of basic income, peo­ple are def­i­nite­ly in a bet­ter posi­tion to reject cer­tain work­ing con­di­tions. We would then be able to speak more freely towards an employ­er we don’t like or whose work­ing con­di­tions we don’t like. In the cur­rent sys­tem, employ­ees can­not sim­ply say “no” because oth­er­wise they would lose their jobs and thus the finan­cial secu­ri­ty for them­selves and their fam­i­lies for the next few months. The free­dom to say “no” to exist­ing employ­ment or bad employ­ment increas­es with the intro­duc­tion of an uncon­di­tion­al basic income.

The vari­ety of options which, gen­er­al­ly speak­ing, are more read­i­ly avail­able to the employ­er than to the employ­ee – would shift in the direc­tion of the employ­ee. I don’t think that an uncon­di­tion­al basic income will stop every­one from work­ing. This is also con­firmed by a series of field exper­i­ments, such as were recent­ly held in Fin­land. For peo­ple, free­dom from work is not the goal for a mean­ing­ful life. Peo­ple want to par­tic­i­pate in the labour mar­ket because work may be exhaust­ing at times, but, in most cas­es, it is also ful­fill­ing. Work pro­motes social aspects, cre­ates inter­per­son­al con­nec­tions and pro­motes social inte­gra­tion. That’s why we also need to look close­ly at what peo­ple are actu­al­ly doing when uncon­di­tion­al pay­ments are being made.

The lat­est field exper­i­ments have so far con­firmed that peo­ple don’t usu­al­ly quit, but might per­haps work less in their exist­ing jobs, espe­cial­ly if oth­er tasks, such as rais­ing chil­dren or car­ing for old­er fam­i­ly mem­bers, have to be account­ed for. Work will not become obso­lete. Rather, an adjust­ment to the work-life bal­ance will take place. The same can also be observed in the case of child­less employ­ees who do not need to care for old­er fam­i­ly mem­bers. Some spend more time doing their hob­bies and this cre­ates space for cre­ativ­i­ty. Oth­ers get involved in vol­un­teer work or in the neigh­bour­hood and here the aspect of a com­mon good is strength­ened. These activ­i­ties become more impor­tant because peo­ple can put more effort in these new fields.

We must there­fore broad­en the con­cept of employ­ment in gen­er­al so that it includes diverse forms of work which are not remu­ner­at­ed at the moment – includ­ing civic duties with­in a demo­c­ra­t­ic soci­ety that are def­i­nite­ly impor­tant to the sys­tem as a whole. This is some­thing we expe­ri­enced, for exam­ple, dur­ing the pan­dem­ic but also with the flood dis­as­ters last year. There­fore, focus­ing on paid labour in com­pe­ti­tion with work done by machines or robots isn’t sus­tain­able in the long term. We must recon­sid­er the whole con­cept of work. We have to take a clos­er look at what is actu­al­ly done with the new spare time when – and I agree with you – paid work becomes scarcer. The impor­tance of per­son­al ser­vices will increase in areas, where there are sure to be an increase in needs, not least due to demo­graph­ic changes. And this emo­tion­al activ­i­ty can­not always be sub­sti­tut­ed by paid work alone. Rather, this type of labour which peo­ple do of their own free will serves the entire com­mu­ni­ty. The anx­i­ety and fear that aris­es when paid work becomes scarcer, – i.e. All the men­tal and health issues, such as stress and, in the worst-case sce­nario, depres­sion, would decrease with the intro­duc­tion of guar­an­teed pay­ments. This is shown by field stud­ies, such as the study from Fin­land men­tioned above. In Ger­many we still don’t have enough empir­i­cal facts. It is also pos­si­ble that peo­ple sit pas­sive­ly in front of the tele­vi­sion, PC, stream­ing ser­vices or social media and invest their uncon­di­tion­al mon­ey in dig­i­tal plat­forms to pass the time. This is an empir­i­cal ques­tion about which we know far too lit­tle. For this pur­pose, research should be car­ried out so that more facts and insights emerge and clichés and stereo­types are eliminated.

Big data, algo­rithms and oth­er dig­i­tal tools do not pro­duce qual­i­ta­tive but rather quan­ti­ta­tive aspects. Many por­tals offer log-in screens aimed at stan­dard­i­s­a­tion. What will hap­pen to cre­ativ­i­ty, dis­rup­tive inno­va­tion, human val­ues, human togeth­er­ness? Would these val­ues flour­ish again with the intro­duc­tion of an uncon­di­tion­al income, and would that have a pos­i­tive impact on the GDP?

I do not rule out the pos­si­bil­i­ty of an uncon­di­tion­al basic income off­set­ting dwin­dling inno­va­tion, cer­tain val­ues ​​and the com­mon good. But I am also enough of a real­ist to know that it can­not be a panacea for socio-polit­i­cal change process­es which can only be solved by a month­ly cash pay­ment. We need enough space and pros­per­i­ty in our soci­ety so that cre­ativ­i­ty, col­lec­tiv­i­ty and impor­tant val­ues ​​are able to flour­ish and advance. It is a ques­tion of how our edu­ca­tion sys­tem will con­tin­ue to devel­op, which skills will be con­sid­ered to be desir­able, which cur­ric­u­la we will have and in which direc­tion we will head and how we will edu­cate the next gen­er­a­tion to shape our future. And it is this very gen­er­a­tion which is fac­ing enor­mous chal­lenges with regard to cli­mate change: an immense task, espe­cial­ly for the governments.

An uncon­di­tion­al basic income would be a new evo­lu­tion­ary process, a shift in par­a­digm which would trig­ger many new ques­tions and set many spir­i­tu­al, moral and eco­nom­ic forces in motion. For exam­ple, what does work mean for peo­ple? Will they be sat­is­fied and com­fort­able with­out work and with­out a reg­u­lar work­flow? What could then bring mean­ing to our lives and what could give us sat­is­fac­tion? Today, invest­ment is tak­ing the place of work. What comes next? Will we able to man­age those changes and how will the state react to this trans­for­ma­tion or “change”?

Evo­lu­tion? I would say that com­pared to our exist­ing social secu­ri­ty sys­tem, an uncon­di­tion­al basic income is more than an evo­lu­tion. This is a tran­si­tion to a new sys­tem where there is no need for an eval­u­a­tion by an agency. Our cur­rent sup­port pay­ments – unem­ploy­ment insur­ance, health and nurs­ing care insur­ance, pen­sions, etc. – are based on the premise that peo­ple can no longer help them­selves. The moment a per­son has assets or lives in a part­ner­ship with some­one who is wealthy, the exist­ing assets are tak­en into account in our social secu­ri­ty sys­tem and although the per­son in ques­tion is deemed to be in a state of need – which the com­mu­ni­ty sup­ports through tax pay­ments- their sup­port is decreased. This is cur­rent­ly under debate and is the top­ic of much dis­cus­sion. It’s about sanc­tions – i.e., the reduc­tion of state ben­e­fits – for those unem­ployed who do not com­ply with the oblig­a­tion to report to a job cen­tre. In a world of uncon­di­tion­al basic income, every cit­i­zen would receive a reli­able cash pay­ment at birth as a “nat­ur­al inher­i­tance”- as a basic endow­ment. This applies both to peo­ple who live in mod­est cir­cum­stances as well as to the very wealthy.

It’s sim­i­lar with Ger­man child sup­port ben­e­fits, which come clos­est to the idea of ​​an uncon­di­tion­al basic income. Every child receives child sup­port ben­e­fits from birth up to a cer­tain age, regard­less of the income lev­el of their par­ents and the amount depends on the num­ber of chil­dren. The cur­rent debate about basic child secu­ri­ty is aimed at a change in child ben­e­fit, where the state would like to give every child the same amount of mon­ey as a tax relief or as a pos­i­tive pay­ment, because, as things stand, the child ben­e­fits of a multimillionaire’s child are high­er than those due to the income of par­ents who are on social wel­fare. The cur­rent debate on basic child secu­ri­ty in the coali­tion agree­ment of the new “traf­fic light coali­tion” gov­ern­ment shows that this top­ic is on the dai­ly agen­da of lead­ing politicians.

This exam­ple also makes it clear once more that a change of course is required – name­ly from a pay­ment cur­rent­ly aimed at sup­port­ing those who ben­e­fit from the pay­ments into a future which guar­an­tees mon­ey pay­ments. This is an insti­tu­tion­al­ly sig­nif­i­cant change but the cen­tral ques­tion of an insti­tu­tion­al trans­for­ma­tion- espe­cial­ly with regard to what form tax-based financ­ing would have to take- still needs to be dis­cussed and demo­c­ra­t­i­cal­ly resolved.

Social mar­ket economies are based on labour. They depend on the pros­per­i­ty of the indi­vid­ual, the income of the state, and finan­cial pro­vi­sions for ill­ness and old age. Is the promise of a social mar­ket econ­o­my crum­bling? Is the uncon­di­tion­al basic income a solution?

The ques­tion is whether the indi­vid­ual will con­tin­ue to be enti­tled to pro­tec­tion in the future in the event of spe­cial needs, for exam­ple, due to ill­ness or dis­abil­i­ty. Above all, how­ev­er, this has to be syn­chro­nised with work incen­tives. Paid as well as unpaid labour is the foun­da­tion of any social mar­ket econ­o­my and an indi­ca­tor of a nation’s prosperity.

The usu­al mea­sure of pros­per­i­ty is quan­ti­fied by cal­cu­lat­ing the gross nation­al prod­uct, which cur­rent­ly includes all paid ser­vices that are per­formed in an econ­o­my. The cal­cu­la­tion of the gross nation­al prod­uct would have to be adjust­ed because of the increase in unpaid labour. We need to make the change from our cur­rent sys­tem to a new sys­tem in an intel­li­gent fash­ion; our exist­ing cal­cu­la­tion of the gross nation­al prod­uct must be over­hauled ‑not to men­tion adjust­ing our tax sys­tem and our social secu­ri­ty accord­ing­ly. One thing, how­ev­er, is clear:  Cit­i­zens do not want to com­plete­ly give up the achieve­ments they already have – even in a sys­tem of uncon­di­tion­al income.

Peo­ple with mul­ti­ple dis­abil­i­ties receive high­er pay­ments and this sys­tem should also be main­tained and should not be com­pen­sat­ed with a lump-snum pay­ment of basic secu­ri­ty, as is the case for peo­ple with­out dis­abil­i­ties. These peo­ple have health restric­tions due to their dis­abil­i­ty and are there­fore in need. That is why a wel­fare state will still be required in the future which bal­ances uncon­di­tion­al basic incomes and paid work­loads through tax deduc­tions and social secu­ri­ty con­tri­bu­tions. These ele­ments still need some adjust­ment. For the low­er income groups, in par­tic­u­lar, it is impor­tant to find a suit­able mech­a­nism to ensure that the incen­tives for doing paid and tax­able work remain high. Then the idea of ​​a social mar­ket econ­o­my will also remain sus­tain­able and be trans­formed to include an uncon­di­tion­al basic income as a uni­ver­sal income for all citizens.

With the advent of dig­i­tal­i­sa­tion, we are expe­ri­enc­ing a pow­er shift from the state to the pri­vate sec­tor. The new play­ers are called GAFAM. Are they also behind an uncon­di­tion­al basic income and will they con­fig­ure it so that peo­ple have the income need­ed to buy their prod­ucts and ser­vices? Will they ensure that people’s free­dom of choice expands?

A healthy degree of scep­ti­cism is def­i­nite­ly war­rant­ed con­cern­ing this ques­tion. It is strik­ing that a num­ber of mul­ti-bil­lion­aires who are asso­ci­at­ed with glob­al com­pa­nies are con­spic­u­ous­ly attached to the idea of ​​an uncon­di­tion­al basic income. We have to won­der if they want their plat­forms and ser­vices to be in con­tin­u­ous demand and are thus try­ing to ensure their use with a basic income financed by the state through taxes.

The premise of a basic income must include a high lev­el of will­ing­ness to work and to do some­thing for soci­ety, and that pure­ly con­sump­tive behav­iour does not ben­e­fit soci­ety. The idea of ​​polar­is­ing grow­ing eco­nom­ic inequal­i­ty, which is reflect­ed in your ques­tion, should not be accel­er­at­ed by a basic income. Rather, reduc­ing the degree of eco­nom­ic inequal­i­ty would be desir­able – how­ev­er, sup­port­ers of the idea of ​​a basic income come from camps which are both sup­port­ive and crit­i­cal of cap­i­tal­ism; There­fore, the ques­tion of how it is to be financed and using what sort of tax is a cen­tral aspect for shap­ing the future dis­tri­b­u­tion of income and wealth.

If we assume that pow­er does shift from the state to the pri­vate sec­tor, then it becomes obvi­ous that social and statu­to­ry duties of care, which are meant to be per­formed by the state, are not to be passed on to the pri­vate sec­tor. The assets of this GAFAM are clev­er­ly man­aged from a tax point of view – for tax-sav­ing pur­pos­es, they are often placed in foun­da­tions, where the osten­si­ble pur­pos­es of the foun­da­tion in ques­tion do not nec­es­sar­i­ly coin­cide with the state’s duty of care and the demo­c­ra­t­i­cal­ly agreed upon goals of a wel­fare state. The founders them­selves define the pur­pose of the foun­da­tion to suit their finan­cial goals and their pref­er­ences. GAFAM makes a lot of mon­ey, becomes even more pow­er­ful through insight into data, increas­es their effi­cien­cy via automa­tion and so on.  Con­se­quent­ly, if there is less paid labour, there will be at the very least a decrease in pay­roll tax rev­enues because we are tax­ing human labour and not machine labour. That is why we need new types of taxes.

One pos­si­ble approach could be nat­ur­al resource tax­es, such as high­er tax­es on oil and oth­er nat­ur­al resources that could not only fund uni­ver­sal basic income schemes, but also our inter­ac­tions for the good of our plan­et. We are famil­iar with the CO₂ tax, which does not tax work, but instead CO₂ emis­sions only.

The recent­ly deceased Götz Wern­er advo­cat­ed an increase in con­sump­tion tax: “Tax­es per se are not the prob­lem”. The car­di­nal error lies in the sys­tem of tax col­lec­tion. It starts where some­thing is done. That is the rea­son why a feel­ing of injus­tice is grad­u­al­ly creep­ing in. It would be much fair­er and more com­pre­hen­si­ble to levy the tax only when the ser­vice is being used. Whether con­sump­tion tax­es would real­ly be fair­er at the social lev­el has to remain doubt­ful so long as, for exam­ple, the prices for dai­ly needs and hous­ing rise and the amount of basic income were not adjust­ed, com­men­su­rate with inflation.

Anoth­er pos­si­bil­i­ty would be tax­ing mon­ey trans­ac­tions- even if it is only at a low-lev­el. Aus­tria, for exam­ple, had pro­posed a finan­cial trans­ac­tion tax of 0.94% on all finan­cial trans­ac­tions made in Aus­tria but a 2019 ref­er­en­dum on this pro­pos­al vot­ed against it. These types of approach­es are being dis­cussed as a way to refi­nance uncon­di­tion­al basic incomes. Per­haps we need a mix of dif­fer­ent types of tax­a­tion because both paid and unpaid labour exist.

Accord­ing to the Fed­er­al Min­istry of Finance, rough­ly 3 mil­lion peo­ple in Ger­many earn less than 2000 euros (gross income) per month although they work full-time, while 10 mil­lion earn less than 12 euros an hour. Since 2010, the inequal­i­ty of annu­al incomes in Ger­many has been on the rise again. Wages and salaries of the rich­est 10% have increased par­tic­u­lar­ly sharply. The bot­tom line is that the poor­est third has ben­e­fit­ed lit­tle or have even lost ground in Ger­many over the last three decades. Nev­er­the­less, dur­ing this peri­od tax­es were low­ered for the top third of income groups and sig­nif­i­cant­ly increased for the bot­tom half. Almost half of the pop­u­la­tion has hard­ly any sav­ings or pro­vi­sions for old age or for the fam­i­ly. Could an uncon­di­tion­al basic income help stop the widen­ing gap between rich and poor? Will the rich be fund­ing this uni­ver­sal basic income?

Con­tain­ment will depend on how any basic income has been designed and fund­ed. If we look at income tax, for instance, the top 10% would have to pay a dis­pro­por­tion­ate amount of tax and the ques­tion for politi­cians would then be how much of an income tax bur­den the top 10% could be expect­ed to bear. There­fore, the answer is that with a basic income – as is cur­rent­ly being dis­cussed – one could dras­ti­cal­ly reduce the exist­ing inequal­i­ty. On the oth­er hand, it is also true that with such a basic income, the top 10% would also receive a basic income. So, while you would pay more on bal­ance, as a recip­i­ent of a basic income you would of course receive a tax-free allowance, which would be set at dou­ble the cur­rent tax-free allowance. Whether the polar­i­sa­tion between rich and poor can be curbed depends very much on whether future tax rates are in the low­er income lev­els (i.e., just above the uncon­di­tion­al basic income). If this is used for relief and there is an incen­tive for gain­ful employ­ment (i.e., addi­tion­al work is not penalised as is cur­rent­ly the case with Hartz IV recip­i­ents, where 80% of the addi­tion­al income is lost), then it might suc­ceed. This means that the thresh­old would have to be set above the basic income lim­it as well as of addi­tion­al gain­ful employ­ment, so that the inequal­i­ty between rich and poor would be com­pen­sat­ed. What would def­i­nite­ly be resolved would be the phe­nom­e­non of hid­den pover­ty which I men­tioned earlier.

In the USA there is an ini­tia­tive enti­tled “the Giv­ing Pledge” which was start­ed by War­ren Buf­fet. Very-wealthy mem­bers of soci­ety pledge to give away a large part of their wealth dur­ing their life­time. Is “the Giv­ing Pledge” a tem­plate for an uncon­di­tion­al basic income? Do Ger­many’s wealthy-elite bear some respon­si­bil­i­ty for the gap between rich and poor because their salaries have dou­bled since the ear­ly 1990s? Will the cri­sis of social inequal­i­ty be alle­vi­at­ed or exacerbated?

The Giv­ing Pledge trend is dif­fi­cult to recog­nise among Ger­many’s top earn­ers. Even if dona­tions are by no means low at around 10 bil­lion euros a year, as a DIW study found, these amounts could still be increased.

We can­not do with­out our cur­rent wel­fare state because it takes on impor­tant and sys­tem­i­cal­ly rel­e­vant tasks in our com­mu­ni­ty that are not car­ried out by the top earn­ers. A devel­op­ment which is based on vol­un­tary dona­tions or vol­un­tary tax­es would be a good thing – and there are iso­lat­ed ini­tia­tives such as “Give direct­ly” in the USA, which also gen­er­ous­ly finance research in the field of uncon­di­tion­al basic incomes.

How­ev­er, it would require a lot of opti­mism to believe that the Ger­man wealthy elite would get car­ried away by this move­ment and do some­thing to coun­ter­act inequal­i­ty of their own accord.

A lot could be achieved if the wealthy elite stopped avoid­ing pay­ing tax­es, which at the moment they can do in many per­fect­ly legal ways and if they accept­ed that tax­a­tion ulti­mate­ly secures the future of their assets in Ger­many. Ulti­mate­ly, this also includes tax com­pli­ance and a will­ing­ness to pay as opposed to tax eva­sion – even if tax avoid­ance is often con­sid­ered a virtue these days. It would require a reassess­ment of Mam­mon among the top earn­ers who now claim tax avoid­ance is sim­ply good form or make a sport out of tax avoid­ance. Tax pay­ments are ulti­mate­ly a guar­an­tee for main­tain­ing social peace. When social inequal­i­ty reach­es dan­ger­ous lev­els, vio­lent clash­es can ensue – as the yel­low vest demon­stra­tions in France have shown – which endan­ger even the wealth­i­est. At that point the wealthy elite will have to retreat to sep­a­rate com­mu­ni­ties in order to be able to live peace­ful­ly and still be able to enjoy their wealth. I would be a pro­po­nent of tax com­pli­ance and advo­cate that tax com­pli­ance be made a virtue. The cur­rent slo­gan ” the per­son who pays a lot of tax­es is stu­pid” is naive. Those who pay a lot of tax­es also con­tribute to the func­tion­ing of our soci­ety and pay their share towards solv­ing the prob­lem of polar­i­sa­tion in our soci­ety. The hon­est tax­pay­er should be appre­ci­at­ed and their con­tri­bu­tion val­ued more than some­one who avoids tax­es pro­fes­sion­al­ly, takes their earn­ings and assets across the bor­der with 3 clicks and thus does noth­ing to finance Ger­man tax author­i­ties who in turn sup­port social insti­tu­tions, judi­cial sys­tems, the armed forces, the police, emer­gency ser­vices and so on.

You advo­cate financ­ing an uncon­di­tion­al basic income through a finan­cial trans­ac­tion tax. I assume you make a dis­tinc­tion between real and finan­cial economies: The real econ­o­my, mean­ing the econ­o­my that employs peo­ple and usu­al­ly pro­duces goods, and a finan­cial econ­o­my, where finan­cial trans­ac­tions take place (most­ly using algo­rithms and auto­mat­ed process­es). In 1970, finan­cial and real economies were still in sync. By 1990, how­ev­er, the finan­cial world was already lead­ing by 2:1. In the year 2000 the ratio was 3:1. Today the world’s finan­cial wealth is at $300 tril­lion. That’s almost four times as much as all real eco­nom­ic val­ues ​​com­bined. Is this finan­cial econ­o­my and its returns financ­ing the pan­dem­ic today and will it per­haps be doing the same for uncon­di­tion­al incomes? If this is the case, then we must not for­get that real and finan­cial economies are depen­dent on one anoth­er. What impact will this depen­den­cy have on the real econ­o­my – espe­cial­ly if the real econ­o­my employs few­er and few­er peo­ple – giv­en that the finan­cial sec­tor needs the real econ­o­my, its invest­ments and huge tax write-offs? Will we still depend on the real econ­o­my and, if so, would the con­di­tions have to change?

While I am no expert at assess­ing the rela­tion­ship between real and finan­cial economies at the macro­scop­ic lev­el, the fact remains, how­ev­er, that the base of the Ger­man real econ­o­my will have to grow in the next few years so that we can face the chal­lenge of cli­mate change and also cope with oth­er dif­fi­cul­ties, such as demo­graph­ic ones, in a very short peri­od of time. The finan­cial indus­try uses dig­i­tal tools to a large extent because spec­u­la­tions are analysed and processed by algo­rithms in a mat­ter of sec­onds. Investors are only inter­est­ed in the prof­it mar­gin and less in over­rid­ing issues such as the envi­ron­ment, species pro­tec­tion, fair trade, etc. In a real econ­o­my, paid labour per­formed by peo­ple is dimin­ish­ing because machines are tak­ing over many work aspects and pro­duc­tion has also become faster owing to automa­tion. This means that if we don’t suc­ceed in broad­en­ing the con­cept of work and attract­ing peo­ple to do unpaid work for the com­mon good, inno­va­tion or sim­i­lar, we will be fac­ing a dif­fi­cult sit­u­a­tion. It is quite pos­si­ble that plans which we orig­i­nal­ly had will dis­si­pate after we have earned so much so quick­ly from the finan­cial sec­tor and that we return to the real econ­o­my after all.

Con­sid­er­ing all these chal­leng­ing sit­u­a­tions, immense sums of mon­ey will be required to enable the kinds of invest­ments need­ed for these very chal­lenges. The inter­ac­tion between the real and finan­cial economies is required to achieve aims that should be stim­u­lat­ed and fuelled via a mar­ket mech­a­nism in order to gain the accel­er­a­tion need­ed. But mon­ey is not the only rea­son why the pace of the decar­bon­i­sa­tion trans­for­ma­tion of our econ­o­my is cur­rent­ly slow­ing down. In many cas­es, bureau­crat­ic issues of cit­i­zen par­tic­i­pa­tion and approval pro­ce­dures pre­vent cli­mate goals from being achieved on time. But the cen­tral bank is cer­tain­ly also required to grant cred­it to sec­tors pur­su­ing long-term goals and val­ues that are both rel­e­vant and sig­nif­i­cant. We there­fore have to assume there is a cer­tain lev­el of con­trol in the finan­cial sec­tor. We will need intel­li­gent finan­cial and mon­e­tary policies. 

I remain, how­ev­er, scep­ti­cal as to how much a basic income can real­ly con­tribute to this prob­lem. In the next few years, immense efforts in the real econ­o­my will be required to man­age and achieve a trans­for­ma­tion towards a regen­er­a­tive econ­o­my. Above all, this requires a high lev­el of trust between cit­i­zens and politi­cians as well as state institutions.

There are also oppo­nents of uncon­di­tion­al income who often say it can­not be financed. Is it real­is­tic to think that the sav­ings in admin­is­tra­tion as well as the low pro­duc­tion costs due to automa­tion will cov­er the expens­es of an uncon­di­tion­al income? And what about devel­op­ing coun­tries and the third world? A lot can be cal­cu­lat­ed or esti­mat­ed which can lead to dif­fer­ent results depend­ing on one’s cre­ativ­i­ty. Will the real­i­sa­tion of an uncon­di­tion­al income depend on who comes up with the more con­vinc­ing cal­cu­la­tion? And will peo­ple under­stand this cal­cu­la­tion so that they can decide whether they are for or against an uncon­di­tion­al income?

In Ger­many we live in a demo­c­ra­t­ic com­mu­ni­ty, whose gov­ern­ment is elect­ed by par­lia­ment. First of all, none of the par­ties rep­re­sent­ed in the Bun­destag is cur­rent­ly in favour of intro­duc­ing an uncon­di­tion­al basic income; sup­port­ers can only be found with­in the par­ty Die Linke, as well as among the Greens, but they by no means form the major­i­ty of their par­lia­men­tary groups.

Whether and how an uncon­di­tion­al basic income will be realised is a polit­i­cal process that must first be decid­ed with­in the frame­work of our par­lia­men­tary con­sti­tu­tion. It is sim­ply a mat­ter of an insti­tu­tion­al (re)control process, requir­ing demo­c­ra­t­i­cal­ly elect­ed majori­ties. Achiev­ing this is a dif­fi­cult and sen­si­tive mat­ter, espe­cial­ly with the addi­tion­al tax bur­dens, as coali­tion nego­ti­a­tions have shown very clear­ly. A broad alliance is need­ed that is will­ing to ini­ti­ate and imple­ment a fun­da­men­tal change in our tax­a­tion and social system.

I am con­vinced that the courage to make a fun­da­men­tal change will increase in the future. In addi­tion to the changes men­tioned in the labour mar­ket, we will also be fac­ing a demo­graph­ic chal­lenge because our tra­di­tion­al sys­tems will find it increas­ing­ly dif­fi­cult to finance our social secu­ri­ty due to these demo­graph­ic changes- and we must not for­get the increase in bureau­cra­cy in a few years, when the baby boomer gen­er­a­tion leaves the labour mar­ket and is no longer an active con­trib­u­tor. At present, these prob­lems are still being ignored to a cer­tain extent. How­ev­er, we might soon reach the break­ing point and then the ques­tion of the sys­tem in place will cer­tain­ly have to be dis­cussed more broadly.

My favourite quote:

“When the Utopi­an oases dry up, a desert con­sist­ing of banal­i­ty and help­less­ness starts to take over”.

Jür­gen Habermas

Of course, the promise of social secu­ri­ty made by Otto Bis­mar­ck more than 150 years ago and his so-called equiv­a­lence fic­tion will also need to be recon­sid­ered, i.e., that all social ben­e­fits are equiv­a­lent­ly linked to the income earned from work. In this con­text, the equiv­a­lence of con­tri­bu­tions will need to be revis­it­ed, i.e., that every cit­i­zen may in future receive a fixed amount at a sub­sis­tence lev­el, on which they can build in order to pri­vate­ly sup­ple­ment and increase their indi­vid­ual social secu­ri­ty. Then peo­ple will no longer be held account­able to a social law requir­ing a high tax ratio in rela­tion to their income and, at the same time, are finan­cial­ly less secure in rela­tion to pre­vi­ous gen­er­a­tions because soci­ety is get­ting old­er and few­er young peo­ple pay into social secu­ri­ty in rela­tion to the old­er peo­ple who ben­e­fit from the sys­tem. Here I see oppor­tu­ni­ties for an open-end­ed debate about guar­an­teed income sys­tems – be it for all or parts of the pop­u­la­tion. This is a big under­tak­ing that will cer­tain­ly require more than one leg­isla­tive peri­od and for which we need social con­sen­sus. This will require charis­mat­ic per­son­al­i­ties who can bring an idea to com­ple­tion. Dieter Althaus was one of the politi­cians who, as ear­ly as 2006, advo­cat­ed a sys­temic restruc­tur­ing of tax­es and social secu­ri­ty con­tri­bu­tions towards a citizen’s income. Let’s see what happens…

Prof. Schupp, thank you for shar­ing your reflec­tions on the shift in par­a­digm regard­ing uncon­di­tion­al income in the dig­i­tal age.

Thank you, Dr Cal­daro­la, and I look for­ward to read­ing your upcom­ing inter­views with rec­og­nized experts, delv­ing even deep­er into this fas­ci­nat­ing topic.

---

¹ https://​www​.springer​pro​fes​sion​al​.de/​g​r​u​n​d​e​i​n​k​o​m​m​e​n​-​v​o​n​-​d​e​r​-​v​i​s​i​o​n​-​z​u​r​-​s​c​h​l​e​i​c​h​e​n​d​e​n​-​s​o​z​i​a​l​s​t​a​a​t​l​i​c​h​e​/​2​0​2​0​5​184
² Paine in Kovce/Priddat 2019: 86
³ Kovce/Priddat 2019:29