Economic Policy inequality ZEIT ONLINE op-ed column

Unconditional basic income does not equal more freedom

This text was also published in German in ZEIT ONLINE on April 28 as part of the op-ed column “Fratzschers Verteilungsfragen“.

“Freedom for the wolves has often meant death to the sheep,” noted British philosopher Isaiah Berlin as a way of describing the conflicts in industrial society. Technological change and globalization have brought great freedom and opportunity to some people. Many others, however, feel threatened by these developments. They are worried about their jobs and fear an increasing dependence on the state with less personal freedom.

In view of the growing polarization of society, some in politics – and ever more in science and civil society – see the best solution in greater redistribution via the social state. Some demand taxes on the rich and higher monetary transfer benefits for the weakest segments of society. Others want to instate unconditional basic income for everyone, a fixed amount each month free of obligations or services in return. Its proponents claim this would create freedom. After all, people would no longer be economically strained in securing their livelihoods.

Those calling for unconditional basic income emphasize four strengths: it is egalitarian, liberal, individualistic, and economically sensible. However, close examination reveals that unconditional basic income does not possess any of these four characteristics in a broader sense.

An unconditional basic income of €1,000 per person per month, for example, would certainly be egalitarian in the sense that all are treated equally. However, this definition of “egalitarian” is unusually narrow because it does not distinguish among equal opportunity, equitable distribution and equitable benefits. When it comes to equitable distribution, this type of unconditional basic income, at least as outlined in most recent proposals, would relieve low earners and the poorest segments of society. But it would place a higher burden on the middle class and lighten the tax burden on society’s wealthiest segments. It is by no means clear that unconditional basic income would provide more equitable distribution in the eyes of the majority of society than current social systems do.

And the discussion surrounding unconditional basic income completely ignores equal opportunity. Some people need much more state aid and support than others to develop their abilities and talents to be able to contribute to the economy and society. State support of €1,000 per month might simply be too little to ensure equal opportunity. In this sense, unconditional basic income is not egalitarian; rather it is blind to the different needs of each individual.

The second contradiction is that this type of basic income is not as liberal as it seems. The idea of a subsidy that liberates people from the pressure of having to tend to their work and income actively rests on a much too narrow and one-sided definition of freedom. As Isaiah Berlin underscored, people require negative freedom in addition to positive freedom. In other words: The state and society not only have the role of legally granting citizens the freedom to make individual decisions. They must also clear as many obstacles and hurdles out of the way as possible for individuals, so they can really take advantage of this freedom.

Most of the concepts put forward for unconditional basic income are approximately the equivalent of the state and society refusing responsibility for their roles. All individuals have different needs with regard to developing skills and exercising free choice.

This is why, more broadly, unconditional basic income is not individualistic. Its proponents underline that instead of demanding people to meet expectations it will encourage them to pursue their dreams, such that everyone will receive support regardless of lifestyle.

But is it really right, and desirable from the individual’s perspective – not to be challenged by requirements? From research on happiness, we know that people’s satisfaction with their lives is only weakly dependent on income and personal economic and financial situation. It is just as important to be part of a community, to receive recognition and respect, and to accept responsibility for themselves and others.

Making today’s conditional basic income unconditional would thus not be constructive; nor would it necessarily lead to more happiness and satisfaction with life. On the contrary, it is not only the right of the state but can also be its duty to require something of its citizens, both for the good of the community and in the interest of the individual. There is a risk, of course, of the state’s demands quickly becoming paternalistic and restricting the freedom of the individual. This is not how it should be. But such demands are usually the lesser of the two evils – the greater one being state indifference to the lot of the individual.

The fourth fallacy is that unconditional basic income would be economically neutral or even have positive effects. Many argue that with unconditional basic income, low-income earners and people with low-paying jobs in particular would only keep working if they immediately received higher wages. The proponents of unconditional basic income counter this with the claim that it would shift the balance of power in the job market from the employers to the employees.

However, this assumption reflects a blind and seminally false belief in the way markets function. Surveys find that many employees would no longer work as much or at all if they received unconditional basic income. This would lower German economic output and with it, the level of prosperity to be distributed in Germany. Both the employment rate and earnings would plunge to levels significantly lower than those of 15 years ago.

It is also highly improbable that unconditional basic income would lead to a rise in wages for unpleasant or poorly paid jobs. Today, many people work for only a little more money than they would receive as unemployment benefits – mainly because work has an ideational value for them, not only a material one.

Take for instance care for the elderly. It is extremely important for society, yet by today’s standards poorly remunerated. Would unconditional basic income lead to an increase in wages in this sector? Probably not. First, most wages would fall as a result of significant reductions in economic output and purchasing power. After all, more and more Germans are leaving their jobs in geriatric care, and the positions are either not being filled or filled by migrants. Indeed only they would work jobs Germans abandon for unconditional basic income.

Unconditional basic income in Germany would be fundamentally incompatible with the European domestic market and would doom it to failure. A drop in employment among Germans would only lead to the increased migration of other EU citizens interested in filling positions Germans left vacant. Many proponents would limit the unconditional basic income to German citizens for precisely this reason. However, this would split German society into two classes – an untenable situation.

Unconditional basic income is the wrong answer to the challenges of our time. It is neither egalitarian, nor liberal, nor individualistic, nor economically conducive. It would cement societal polarization while failing to create more freedom and opportunity.

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