Economic Policy inequality ZEIT ONLINE op-ed column

Equal opportunity, not basic income, for all

This text was also published in German in ZEIT ONLINE on April 14 as part of the op-ed column “Fratzschers Verteilungsfragen“.

Unconditional basic income has resurfaced as a subject of lively discussion. The Swiss rejected it last year, but other countries are already experimenting to find out what effects such basic income could produce.

It is being treated as a savior – some consider it a cure for social inequality and a means of modernizing the social system, while other see it as compensation for the loss of jobs due to technological change. Unconditional basic income is not able to deliver any of the above. It would, however, enable the State and society to shrug off their responsibility for the weakest members. It would simply continue the current policy of buying a way out via taxes and transfer payments.

The issue of whether and for what reason inequality in Germany has risen is being hotly debated. However, there is no question that the great majority perceives the level of social inequality as too high. Policy makers have not yet succeeded at shaping the major shifts of our era – the technological change, globalization, and the information society – to the majority’s satisfaction. This not only applies to Germany but also includes almost all of the world’s industrial countries. The widespread perception of rising social inequality is fueling the success of populists.

Policy makers have failed to limit social inequality and ensure societal cohesion and solidarity. The demand for unconditional basic income is growing more vociferous – a logical consequence of this failure. Even worse, it is a sign of deepening mistrust. Citizens no longer trust their political representatives to limit inequality and hold society together.

Equal opportunity is not utopian

The concept of unconditional basic income transports the implicit message that equal opportunity and the ideal of the social market economy, in which everyone should be able to take care of him-/herself, is utopian. All that remains for constraining societal difference is increasing redistribution via taxes and transfers. However, it would be fatal to capitulate to this line of argument.

Its proponents’ logic indicates their technology pessimism. In the coming years and decades, the technology change will indeed eliminate many jobs that are well paid today. But that is the worst possible reason for instituting unconditional basic income. It would merely be an attempt to pacify the people who are losing their jobs.

We have been confronted with technological change for more than 200 years, since the beginning of the Industrial Revolution. It has almost always led to the creation of better, more humane, and better-paid new jobs. There is no reason to think that this will not be the case in “our” future. It is not a matter of the State and society to pacify citizens whose job security is probably threatened. Instead, they should help them to adapt and take advantage of the opportunity to leverage technological change.

After all, digitalization and automation can replace many mechanical activities but not the things that characterize us as people: our empathy and creativity. Technological change will make the jobs that emphasize these characteristics more appealing – many of which are in the service sector and still very poorly paid today. This applies to the care professions that are enormously important for the economy and society but typically offer poor working conditions and income, for example. Technological change will not only make the jobs that are well paid today more attractive, but will improve the income and wages for doing at least some of the jobs that are poorly paid today.

Technological change as an opportunity, not a threat

Technological change also opens up an enormous opportunity to offer work that is better and more humane to more people than before. Few would deny that automating physically-demanding industrial jobs would be desirable if they were to be replaced by service jobs that were paid as well or even better. What Germany needs is not unconditional basic income, but unconditional equal opportunity that demands much from each individual and provides them with plenty of support. The State cannot and must not be permitted to shirk its responsibility and try to buy its way out by pacifying people with money instead of offering solid government services. Society’s weakest need better education and educational infrastructure, more continuing education options, better jobs, and greater access to the job market.

Take the child benefit, for example, which federal governments like to raise in order to secure votes. Scientific studies show that parents and children benefit much more from a stronger educational infrastructure – higher daycare quality, more all-day schools, and less education system stratification – than from higher child benefits. Financial transfers are too often used to maintain the status quo and too infrequently to address society’s most urgent challenges.

Proponents of unconditional basic income are correct when they argue that our social systems are no longer sustainable and that technological change is fundamentally changing our society. But unconditional basic income is not the correct answer. It would allow the State to shirk its responsibilities to its citizens. Instead, it must do the opposite and open up perspectives for the weakest, reinforcing societal cohesion and the social market economy’s smooth functioning in the process. With more equal opportunity. Not with more money.

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