Germany just got a universal basic income, and nobody noticed.
Paradigm shift as supreme court caps job center penalties, effectively removing the legal requirement to seek employment.
Germany just got itself a universal basic income through the back door.
We’ll never know if the judges at the German supreme court in Karlsruhe were fully aware of the enormous consequences of their recent verdict. Probably not, because what they ruled on, at least officially, was not the question: Should there be a universal basic income, yes or no?
What they had to decide, on that fateful rainy November Wednesday, was simply the legality of an administrative regulation, concerning possible penalties Hartz-IV benefit recipients can incur, for failing to comply with their legal obligations to do everything (within reason) to end or reduce their dependency.
Nota bene: the German Hartz-IV benefit system is designed as a catch-all safety net — not just for the unemployed, but also for the sick, and for those only able to work a few hours per week; like single parents, or people who care for an elderly relative.
The status quo ante
According to the law under scrutiny, beneficiaries deemed fit to work had to present evidence of their efforts to end their financial dependency. Even though job center agents had considerable discretion as to what to count towards that, the refusal to show any effort whatsoever usually resulted in cancellation of the benefits.
For example, missing a job center appointment (without a valid excuse) resulted in a 10% penalty for the duration of 3 months. Cumulative penalties could, according to the regulations now under judicial scrutiny, reach 100%, in which case all support, including health insurance, would be withheld.
The legal reasons
But this was now declared unconstitutional by the German supreme court.
According to the opinion of the judges, the defendant (the federal government) had failed to prove to the satisfaction of the court, that the provision permitting up to 100% penalties was not only conducive to, but could reasonably be held to be a compelling necessity, i.e. a conditio-sine-qua-non in view of the law’s purpose, which is to nudge beneficiaries back into paid employment.
Absent that proof, a 100% penalty would constitute an undue hardship,
(i.e. a hardship not in service of a legitimate goal) and thus a violation of human dignity (‘Menschenwürde’), which is the primary constitutional principle all German legislation has to comply with.*
Thus, even though the judges assumed some efficacy of the penalties to be self-evident, and accordingly did not declare them per se unconstitutional, the verdict imposes a hard limit of 30% of the basic allowance (excluding rent), beyond which no further cuts may now be made, no matter what.
It is important to get the legal subtleties right. The court did not say that the principle of human dignity compels the state to support its citizens with a UBI. It rather declared unconstitutional the total withdrawing of support, for lack of proof of efficacy – the judicial equivalent of a Jiu-Jitsu move.
And that makes it sound not like that big of a thing. Which is likely the reason why the public, despite taking note of the verdict, has so far failed to realize its profound implications: To go from, essentially, ‘The Hunger Games’ to ‘As you like it.’ can, I believe, rightly be called a paradigm shift.
Because in practice, the verdict means: even if the beneficiary fails to apply for jobs, misses appointments, or, during a job interview, poops on the table while singing La Cucaracha — s/he will under all circumstances retain 70% of the food allowance, plus housing allowance, plus health insurance.
How much? Around 1120 EUR/month
Although this calculation has some caveats, it gives a good idea about the standard of living under the UBI. And what’s more, it is within the range of what past UBI proposals envisioned. The final sum is made up of several components:
Food allowance: 300 Euros
The standard allowance for food and other daily necessities is set at 424 Euros, which, assuming a 30% deduction, would be reduced to around 300 Euros per month. A young, healthy person will find it possible, with some careful planning, to fill their plate for that amount.
Housing costs: ≈ 500 Euros
It is not really possible to give an exact sum here, mostly because the cost (usually: rent+heating) of what counts as ‘adequate housing’ varies from place to place. For a single person, ‘adequate housing’ is defined as any place up to 50 square meters in the low-to-medium price range quarters of town. For Berlin, that is around 500 Euros, for Munich up to 700 Euros, but in some rural areas, 300 Euros would not be an unusual sum, either.
Health insurance: ≈ 320 Euros
This is the hardest to calculate. The monetary value of having health insurance is clearly bigger than zero, but the exact value varies, obviously, with the state of your health. At least in a system without universal healthcare. But in a public health care system, people pay not according to the state of their health, but according to their ability to pay, i.e. the rich more than the poor. Because there exists no genuine ‘market price’ for that kind of health insurance, we have to calculate with a proxy: the minimum employee contribution for regular membership in a public health insurance, which is exactly 323 Euros.
So, for an estimate of how much such a UBI would amount to in your own country, you’d have to add the rent of a medium to small place, whatever you’d have to pay for regular health insurance with full coverage, plus the equivalent of 300 Euros.
Is that a ‘real’ UBI?
That depends, of course, on what you mean by ‘real’. There are many different UBI proposals around: With or without a comprehensive tax reform, as substitute for all other welfare payments (or not), as a negative income tax, as payable from birth, as payable upon maturity, funded by VAT etc. etc. If you insist on your particular model to be implemented to the letter, then (surprise!) this is not a ‘real’ UBI — or rather, not your real UBI. However, all of the UBI proposals I’ve seen share some core features:
- every adult
- receives a monthly payment,
- that covers the basic needs and
- has no conditions attached.
Which is precisely what is now reality in Germany. And of course, one can argue what ‘enough to modestly live on’ means, or should mean, but I’m not going into that. I take it for granted that not starving, not homeless, not dying for lack of medical treatment is a good working definition without any obvious flaws.
(Edit: Something that came up in the comments time and again: can it still be rightfully called a UBI, if it gets reduced upon taking up employment? I’d say that question misses the central point: that each and every UBI proposal is predicated on taxing the relatively richer more, than the relatively less rich.
So, when someone takes up employment, they will naturally have to contribute a bigger share towards the support of the commonwealth than someone who is out of work. How the state decides to collect that money, whether by reducing someone’s benefits or increasing someone’s taxes, is of no real consequence to that person.)
Predicting the Effects of a Universal Basic Income
As you probably know, the predictions about the societal effects of a UBI vary considerably, and they do so roughly along the fault line that divide the two political camps. Some on the political left see it as one further step towards Utopia, of the same order of magnitude as the introduction of the welfare state after World War II. They believe that ‘removing the tyranny of work’ will make everyone free to create art, volunteer for valuable causes, follow their passions and become more fully human, in short: life will become a perpetual spring day picnic in a flowery meadow, with Beethoven’s ‘Ode to Joy’ playing in a loop in the background.
The political right is more skeptical, fearing the collective abandonment of virtue, the spreading of a late-Roman decadence and a gradual enfeeblement of body, mind and spirit. They see it as the first step on a slippery slope of civilizatory decline, culminating in the invasion of Mongol-eyed barbarian hordes from out of the depth of the Eurasian steppe — savages who eat raw meat, pray to strange gods, and wear funny fur hats.
We will soon know whose intuition is right, because we now have a chance to observe the effects of a UBI in the field, in a large, developed country of the Western world. Nobody will get to say “But that wasn’t a real UBI”, nor “Maybe you can do that in Germany, but the economic preconditions here are totally different.” However, my own prediction is that we will see very little change at all, because of some very basic considerations that both the left and the right usually don’t have on their radar.
No matter which side, people tend to equate income solely with money. Now, that is not an unreasonable thing to do, because for most practical purposes, they are the same. But in this case, I believe it is useful to remember that in the past, it was not uncommon to pay people in kind instead. And once you remember that, you realize something very important…
What is an “income”, anyway?
If you take a bird’s eye view, it becomes clear that at the heart of both predictions lies a misunderstanding of what a (monetary) income is, or rather, what it is equal to: the means of survival. That’s what it translates into. And then, you realize that we’ve had a kind of ‘universal basic income’ all along, namely in the form of resources in our natural environment. Ever since we came down from the trees, but also before that.
It just wasn’t a monetary income. And I do concede that getting a monetary, instead of a natural income may be a bit more convenient, but it doesn’t really make that much of a difference. Because, whether our environment gives us food, or money for food, we still have to do some work to get it, whether hunting, shopping, or opening the fridge. Think about it.
Nobody, ever, lived in an environment that was entirely void of anything to assist them in their quest for survival. However, humans differed with regard to the skill they could bring towards making use of these resources, and these factors will play themselves out now as well.
The leverage that an individual can apply to the ‘baseline supply’ of a UBI will vary a lot between people, because people still have vastly differing amounts of social, sexual, intellectual and geographical capital. Competition between people will not be eliminated, just because we now have a UBI.
Competition will simply be about relative social status, instead of about physiological survival. But then, if you consider that (almost?) nobody dies of hunger these days anyway, the consequences for society, whether good or bad, will probably be limited. There will still be zero-sum games, simply because some desirable commodities are by their nature exclusive: not everybody can live in a place in the city center, not everyone can have a nicer car than everyone else.
I’m all for a UBI, because I believe if society is able to guarantee everyone their material existence, it has the moral duty to do so. But I also believe people have overestimated the positive impact of a UBI on general happiness. A good life isn’t just a life without material want, but a life with something meaningful to do. And even though society can for sure help its members with finding that something, it ultimately remains the responsibility of the individual to go that extra step. Because even the best things ultimately lose their meaning, if no challenge is involved in their attainment.
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(FOR LAW GEEKS)
*In the German constitutional framework, the principle of inviolability of human dignity (‘Unverletzlichkeit der Menschenwürde’) is a meta-rule, i.e. a limitation on what kind of laws the legislature may pass in the first place. It says, in a nutshell, that neither the state authorities, nor anyone else may treat a human being as a mere ‘object’. Quite a number of legal rulings can be traced back to this constitutional principle. Among others:
-the ban on capital punishment,
-the ban on life imprisonment without parole
-the ban on shooting down hijacked planes
-a ban on ‘peep shows’ **
The ban on ‘peep shows’ illustrates the idea behind the principle perhaps better than any other single example. Because what was banned was not the public display of nudity for commercial reasons, or on general morality grounds. Naked shows as such always were, and still are, perfectly legal. What was banned, specifically, was to set up the premises in such a way, that the spectator’s identity was concealed from the performer, i.e. ‘ I-can-see-you-but-you-can’t-see-me’, because such an arrangement would by design prevent any form of communication from occurring between the two, and thus put the performer in the position of an object.
Nota bene: this line of legal reasoning shouldn’t be confused with the run-of-the-mill feminist critique around “objectification”, as it applies in all cases, irrespective of the performer’s gender.
However, (and this is really important): as a constitutional principle, human dignity only limits what may be done, it does not prescribe what must be done. It does not per se say that the state must support everyone, it says how the state must administer the support it chooses to give.
(FOR GEN-Z READERS)
**‘Peep shows’ were the analog, primitive ancestors of today’s webcam shows; and just like the Neanderthals, nobody really misses them, but they’re still good for a joke.