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Universal Income, A Utopian Ideal Or Economic Pragmatism?

Given our growing concerns about 'traditional' employment, some say paying people a basic living income should not be linked to work. The idea is appealing, but requires a leap of faith few politicians are willing to take.

At the French unemployment office
At the French unemployment office
Solveig Godeluck

PARIS — The good news for low-income workers in France is that as of January, they're eligible for a targeted monthly activity bonus. The bad news is that because of red tape, long lines and other built-in obstacles, only half of those workers will actually receive the benefit.

It's a problem of access. People who should be eligible to qualify for the bonus are discouraged by the bureaucracy, unsure of their rights, scared off by the risk of having to reimburse undue payments. Sometimes they don't even know the aid exists.

There's a way to fix all of that: remove the conditions; do away with the contingencies. The state could choose instead pay all citizens a basic allowance that, for some, would complement the salaries they already have, and for the unemployed, offset their lack of earnings. No more humiliating paperwork. Goodbye poverty traps. It could also mean an overall reduction in the welfare state's operational costs since it would obviate the need for the various bonsues, scholarships and all the other income-related benefits currently in place.

This is what is called basic income, universal basic income or unconditional income, a concept that was developed by Milton Friedman, in the 1960s, Thomas Paine, two centuries earlier, and that French lawmaker Delphine Batho, a former government minister, is keen to pursue now.

For the past two years, the think tank Génération Libre has been promoting the creation of a monthly "Liber" consisting of 450 euros per adult and 225 eruos per child, balanced by a standard 23% tax on all revenues, including on capital.

"The simple deduction of the total of the Liber (basic and unconditional) from the Libertaxe (proportional to revenues) automatically leads to either a "negative tax" (for the lowest incomes), a sum of money paid in cash by the local authority, or a "positive tax" (for the highest incomes), a net contribution to the local authority," economist Marc de Basquiat and philosopher Gaspard Koenig write. The Liber, they insist, is designed to liberate individuals.

The French Digital Council also mentions basic income in its January report on the transformation of employment. Underemployment is becoming permanent, for diverse reasons that include robotization and the appropriation of value creation by a few Internet giants. And yet the current social protection, based on worker contributions, is becoming ineffective, the Council notes. Also, domestic demand could collapse for lack of job openings — hence the need to imagine "new value redistribution models" that are dissociated from work, to save both the welfare state and the entire economy.

From theory to practice

The idea is nice. But here's the thing: so far, apart from the oil state of Alaska, no one has established a basic income. Finland wants to have a try in 2017 and see the results in 2019. In the Netherlands, some 30 towns, in which environmentalists are strongly established, such as Utrecht and Groeningen, are set to experiment with a basic income at an unknown date. The Swiss are playing with the idea too, and may put it to a referendum in June.

Politicians, however, are still cautious on the issue. This oddity appeals and divides in all parties. People on the political right want to shrink the welfare state and make the most of the basic income to establish a "flat tax" instead of the progressive income tax. But they're afraid of creating generations of helpless people, who would refuse entry-level jobs. Leftists welcome the strengthening of social rights and the advent of a society liberated from the pain of work. But they're also nitpicky when it comes to benefits, unwilling to accept that some people, as is the case with all systems, will lose out.

Moreover, nobody wants to set off into the unknown and risk disaster. Creating a basic income that covers only minimum social benefits, scholarships, social welfare, housing assistance and employment subsidies would save money. But it couldn't, in that case, be more than 200 euros per month for adults and 60 euros per child, the French Digital Council calculated. Not enough to live decently. This is why the difference would have to be covered with other deductions. But the government, if it wants to pay every person between 500 euros and 750 eruos, will have to increase the social security contribution rate by 35 points.

The other solution would consist of keeping conditional benefits alongside the basic income. For instance, unemployed people who are no longer eligible for benefits would only receive the difference between the total of a specific welfare allowance (a bit less than 500 euros) and the new allowance. The problem there, of course, is that the conditionality, complexity and the costs that the basic income scheme promises to reduce would be back.

Half-measures like that are destined to fail, explains Philippe Van Parijs, a researcher from the Catholic University of Louvain and firm proponent of the basic income concept. "We can't test the financial viability of the plan over two years, because we'd also have to adjust the tax system, eliminate exemptions, remove benefits," he explains. The net cost of doing all that, according to Van Parijs, would be higher than if we embraced the new paradigm all at once.

And yet without tests, who will be willing to take the leap? Van Parijs won't let himself get downhearted. "Bismarck introduced social security without samples and experimentation," he recalls. "Before that, it was considered a utopian concept."

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