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

Prof. Dr Jür­gen Schupp – Pho­to: Ben­jamin Gross

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 Trans­for­ma­tion1, 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

About me and my guest

Dr Maria Cristina Caldarola

Dr Maria Cristina Caldarola, LL.M., MBA is the host of “Duet Interviews”, co-founder and CEO of CU³IC UG, a consultancy specialising in systematic approaches to innovation, such as algorithmic IP data analysis and cross-industry search for innovation solutions.

Cristina is a well-regarded legal expert in licensing, patents, trademarks, domains, software, data protection, cloud, big data, digital eco-systems and industry 4.0.

A TRIUM MBA, Cristina is also a frequent keynote speaker, a lecturer at St. Gallen, and the co-author of the recently published Big Data and Law now available in English, German and Mandarin editions.

Prof. Dr. Jürgen Schupp

Jürgen Schupp is a professor of Sociology at Freie Universität Berlin and Senior Research Fellow at the Socio-Economic Panel (SOEP). The SOEP is a research-based infrastructure facility based at the German Institute for Economic Research (DIW Berlin) and also runs one of the largest and longest-running multidisciplinary household surveys in the world, for which around 30,000 people are currently being interviewed on an annual basis. Prof. Schupp was head of the SOEP from 2011 to 2017. Prof. Schupp's main research areas include empirical social research methods, social indicators, social inequality, prosocial behaviour, social security and basic income models.

Dr Maria Cristina Caldarola

Dr Maria Cristina Caldarola, LL.M., MBA is the host of “Duet Interviews”, co-founder and CEO of CU³IC UG, a consultancy specialising in systematic approaches to innovation, such as algorithmic IP data analysis and cross-industry search for innovation solutions.

Cristina is a well-regarded legal expert in licensing, patents, trademarks, domains, software, data protection, cloud, big data, digital eco-systems and industry 4.0.

A TRIUM MBA, Cristina is also a frequent keynote speaker, a lecturer at St. Gallen, and the co-author of the recently published Big Data and Law now available in English, German and Mandarin editions.