Beyond Basic

Why welfare universalism is the key to the basic income debate

When the Viennese stock market crashed in 1873, the idea of the universal basic income was already 100 years old

Barack Obama recently said he wants to discuss the idea. The leader of her majesty’s opposition in the UK, Jeremy Corbyn, is considering it for his election pitch. Even the usually politically apathetic Silicon Valley has jumped on the bandwagon. Progressive elites on both sides of the pond seem infatuated with the idea of a universal basic income.

Although the idea itself is by no means new — American founding father Thomas Paine was first to suggest it — there is a reason why the basic income has developed something like a cult following recently. Confronted with allegedly outdated social state institutions, the basic income promises a strikingly simple solution to fix social welfare. Step One: Cut the complex benefit systems underpinning our contemporary welfare state. Step Two: Replace the old benefits with a fixed monthly grant paid to all adult state citizens. Sounds too simple to work? That’s because it probably is.

In this article, I do not want to go over the pros and cons of the universal basic income, which has been done by other people in a more detailed and professional fashion than I could ever hope to deliver in this short article. Indeed, I will not take a position in this debate for two reasons. Firstly, there are many competing models out there proposing vastly different forms of a universal basic income, making it almost impossible to discuss the matter on more than a superficial level. Secondly, and this goes hand in hand with the first point, we lack the conclusive evidence on any form of universal basic income to make a final assessment. So instead, I want to take a step back and focus on what I believe is the actual key aspect of the basic income: universality.

To talk about the need for universality, we first need to acknowledge one central fact: proponents of the universal basic income are right in at least one way. Our current social welfare system is broken, overly complicated and out of tune with our time. That is no reason to despair. Policy-making is difficult. So difficult, in fact, that it thrives on a single iron law: every policy fails eventually. This happens either because a new policy is inadequate for its circumstances, or because the circumstances have changed over time, rendering a once brilliant policy solution inadequate. Now, this moment of inadequacy has come for a large swathe of our social policies, which were created with the monotonous but regular work life of the Fordist mass production economy in mind. It is easy to see why such a system is inadequate for the latte-sipping millennial vigorously typing away on his shiny laptop to somehow make a living with his latest attempt at revolutionising the digital economy. It is no accident that this same latte-sipping millennial is obsessed with the idea of the basic income. I would argue, however, that it is not the “free money” effect that makes it so appealing, but rather its universality.

Some believe the universal basic income can prevent human misery like during the Great Depression

A basic income that is not unconditionally distributed to all state citizens is nothing else but an unemployment benefit, a tax credit or a consumer subsidy. In other words: a non-universal basic income sounds a lot like classic 20th century welfare state politics. In fact, the basic income in this form already exists. In France, for instance, it goes by the title of Revenu de solidarité active (RSA) and is aimed at those unable to participate on the regular labour market. Germany has simply merged the lowest level of unemployment benefits with its former social aid programme during its Agenda 2010 reforms. Therefore, a minimum standard of living — or “free money” — is already guaranteed in both countries. The main difference between this form of basic income and a universal basic income lies in the way it is distributed. When the existing basic benefits mentioned above were originally introduced, people either had a job, or they didn’t. That made allocating the money to the right people a relatively straightforward exercise. In times like ours, when work lives become increasingly fractured — more and more part-time and freelance jobs — this process becomes disproportionately more complicated. Assessing individual eligibility for the existing benefits schemes necessitates excruciatingly complex bureaucratic structures designed to keep the wrong people from siphoning off the benefits scheme — an almost existential fear especially among right-wing politicians. This basic conflict of the aging social benefits system with modern, individualised work life can be found in other social policy areas as well.

A good case for this is healthcare, where even moving jobs within the borders of a country can be a struggle. In Germany, moving from one employer to the next can mean having to not only move from one insurance to the next, but even from private to state insurance or vice versa. This can not only result in bureaucratic hassle, but also have tremendous financial consequences. To give a personal example, a three-month long internship required me to acquire state insurance, despite my perfectly adequate private provider. Since I was not going to fully give up my old insurance for a three-month stint in a start-up incubator, I ended up with not only one, but two effectively identical health insurances in my name for those three months, all to fulfil legal requirements — in the process eating up about half of my meagre intern salary. Those issues only amplify once one attempts to cross national borders for temporary work in another country.

Similar examples for this phenomenon can easily be found in other areas of the social welfare state. Yet they all boil down to one striking observation: Institutions designed to adjust to individual needs seem unsuited to cater to an increasingly individual lifestyle. Herein lies the true value of the universal basic income idea. Guaranteeing a minimum living standard is something our social state system has been doing for the better part of the last century, but introducing the aspect of universalism to it has inspired an intellectual firestorm. Paradoxically, a universal healthcare system, or a universal basic income, becomes institutions that are much more suited to support a life marked by individual choices and asymmetric careers. The idea of the universal social state is, of course, not new. Politicians like Bernie Sanders touting the advantages of Scandinavian societies most commonly name their universalist welfare state.

Galvanising support for radical reforms: Senator Bernie Sanders

When Bernie Sanders captured the imagination of millions of people with his promise of a more Scandinavian, social democratic America, he showcased the potential of welfare universalism not only as an electoral strategy, but also as an ideology capable of reinvigorating support for democracy and state intervention itself. Those enticed by his promises were exactly the demographic most often identified with political disaffection and cynicism: the young, affluent and well educated.

There is a wider discussion about the benefits and disadvantages of a universalist welfare state to be waged that exceeds the scope of this article. But I hope to have shown that there is more to the debate about the universal basic income than immediately meets the eye. Even if the universal basic income does not turn out to be the white knight to save us all from doom, its underlying concept of universality gives it a magic aura making it so irresistible even to habitually sceptic minds all around the globe. To generate support for a new social deal, policy-makers should therefore begin salvaging this formula: Universalism empowers individuality.