The great utopia. Some thoughts on basic income

May 19, 2017
Editoriale Editorial Open Society
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An editorial for Open by Michel Martone, a preview of  a soon-to-be-released publication, where the author presents his thoughts on basic income, a topic of growing relevance in the Italian and international political debate.

1.

For centuries, basic income has been considered a great utopia. Since its first formulation, in 1797 by the philosopher Thomas Paine, it has been the subject of theories from great thinkers.

As a matter of fact, over the centuries, philosophers and economists such as Thomas Spence, John Stuart Mill, Charles Fourier have put this concept at the center of their regards. But great economists too, such as Bertrand Russel, in his work “Proposed Roads to Freedom: Socialism, Anarchism, and Syndicalism”, along with James Meade in “Agathotopia”, without forgetting with the formulations of more contemporary economists such as Friedrich von Hayek, James Tobin and John Kenneth Galbrait.

These are visionary works that made inevitably different assumptions on basic income, but all of them shared the vision that this same great utopia would have allowed the overcoming of ancient and ideological contrasts.

According to some, basic income would have made it possible to outplay the disparity between communism and the market economy, while according to others, it was the one between rich and poor, as well as other suggesting that the contraposition was between masters and workers.

According to others still, after the introduction of the basic income, it would be meaningless to distinguish between social security systems based on the Bismarckian system and those inspired by Beveridge.

2.

Obviously, all these reconstructions, and exactly because of their visionary quality, had a different idea of basic income.

This is not the place to retrace all of them, since nowadays the most common definition is the one provided by the BIEN, the International association for the development of basic income, under which this type of income is defined as “a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement”. It is, therefore, a measure that is to be differentiated from the minimum income which, in fact, exists across Europe except for Italy and Greece. Minimum income comprises an income supplement for households in conditions of economic indigence and at greater risk of social exclusion.

In other words, in order to be able to produce the most beneficial effects on society, basic income should be recognized to all, from the most affluent to the less fortunate resident, irrespective of the subjective conditions of the beneficiary, whether they are employed, voluntarily or involuntarily unemployed or even unfit for work.

According to this reconstruction, the income of citizenship would provide everyone with social security without representing a disincentive to work, as any additional income, though subject to taxation, would still improve the living conditions of any citizen.

On the basis of such an elaboration, over the past decades basic income has received a renewed attention, so much so that some countries have begun to experiment on its first practical applications.

The first instance of basic income dates back to 1982, when it was decided to allocate oil revenues for the institution of a fund benefiting all inhabitants that had been in Alaska for at least six months (to date, about 650,000 people ), irrespective of age and years of residence in that State.

In other countries, however, attempts have been made to test a basic income on a monthly, not annual, basis. For example, the Finnish government has recently launched an experimental program, where 2,000 unemployed people, aged between 25 and 58, will receive a guaranteed sum of 560 Euros a month for the next two years.

The city of Utrecht, in the Netherlands, should provide from 2017 an income of around 1,200 Euros to 250 citizens, selected on the basis of membership to different age groups and social classes.

In the French region of Aquitaine, projects were launched to provide an unconditional minimum income there. Additionally, in Catalonia, 70 per cent of the population voiced their favour to the Podemos movement proposal for a monthly income of 650 Euros, funded by a 20 per cent contribution from the richer segments of the population.

These attempts have had such an impact on the political imagination of population that they led to a referendum procedure, on June 5, 2016, for Swiss citizens to approve an amendment to the federal constitution with the purpose of introducing a basic income for all residents. 46 per cent of constituents voted, with a clear 77 per cent opposed to the initiative.

While on the one hand this was a defeat for basic income supporters, on the other it represented a great victory, since the issue got the attention of an entire country.

3.

In Italy too, in recent years, basic income has took on a renewed relevance through political debate – the reason being the need to counter the growth of inequality and poverty.

Over the past 10 years, people living in absolute poverty have more than doubled, from just under 2 million in 2005 to 4.6 million today (7.6 per cent of the Italian population): a 149.61 per cent increase. Including people living in relative poverty, the segment reaches 8.3 million, the 13.7 per cent of the population.

What’s more, ISTAT (the Italian National Institute of Statistics) data shows that 28.7 per cent of Italian residents are at risk for poverty or social exclusion. A gap that is likely to widen, as evidenced by the fact that from 2009 to 2014 poorer household income dropped more than the richest ones.

With these data at hand, all parties have advanced their own solutions, but rather than foreseeing the introduction of a basic income, they refer, rather, to a minimum income.

Thus, the 5 Star Movement filed on 29 October 2013 a bill which, to the detriment of its title, has proposed a minimum income, i.e. only to certain subjects, those at greater risk of social exclusion, and not unconditionally to everyone, as theorized by the BIEN.

According to this proposal, as stated in Article 2, the income of citizenship would consist of “the whole of the measures intended to support income for all citizens resident in the national territory who have an income lower than the poverty threshold”. According to Article 4, all people over 18 who are Italian, EU citizens or coming from countries that have signed bilateral social security agreements with Italy would be entitled to the measure.

The maximum amount of the contribution would be equal to the relative poverty threshold according to the EU, ie. 780 Euros – for a total of 9,360 Euros per year – for a recipient with no dependent relatives. This income would in fact be corresponding to the difference between the poverty threshold and all incomes received in Italy or abroad in that moment and from the recipient’s family members, with the exception of retirement benefits and training support.

For subjects between the ages of 18 and 25, however, a qualification or a professional diploma recognized and usable at national and European Union level, an appropriate second-degree education diploma for accessing the labour market or the completion of an education or training course for the attainment of one of the aforementioned qualifications would be required. However, this rule would exclude from its scope particularly vulnerable subjects such as young people who do not go beyond a middle school certificate.

This basic income would be provided without limitation until the persistence of poverty persists, and would be tax-free.

Beneficiaries would be obliged to become available for work, i.e. to attend training courses.They would also be obliged to communicate promptly any variation in their income, capital, work, family situation resulting in the loss of the right to receive a basic income or the change of the amount received to the institutions responsible. Failure to comply with these obligations would result in the loss of this particular aid.

The bill envisages a prize for those who find work on their own, which would amount to two months of basic income, as well as an incentive for companies to recruit the recipients of the subsidy.

Finally, a series of supplementary measures would be designed for paying school and university fees as well as text books, rent and social and health services.

In a hearing at the Chamber of Deputies, the ISTAT President has submitted an estimate of resources required for the approval of this bill, amounting approximately to 15.5 billion Euros a year. However, to reach its coverage, the bill provides for generic and hardly implementable measures, including in particular cuts in military spending, the abolishment of some non-economic public entities, the elimination of the exemption from paying property taxes on buildings owned by Church, with the exception of places of worship and the reduction of allowances paid to Members of Parliament. These steps are difficult to achieve and unlikely to be sufficient to cover the project. To date, the bill is still being examined in a special commission.

4.

If we take a closer look, other political forces, rather than referring to a basic income, required the implementation of a minimum income.

First things first: on April 10, 2013, a bill was proposed on the initiative of 21 members of the Democratic Party in order to experimentally establish a so called “Minimum income of active citizenship”. Potential beneficiaries would be all Italian or EU member states citizens having been resident in Italy for at least three years as well as foreigners and stateless persons residing in Italy for at least three years with a valid residence permit for work. Not even this form of benefit would be unconditional, since its provision would be subject to the possession of a number of requirements, such as being between the ages of 18 and the retirement age and being unemployed, willing to work or attending vocational training courses. This particular income would amount to 500 Euros a month, increased by one third for each component of the dependent household. The duration is set to one year, renewable for another year. At this time, the proposal has been assigned for reviewing to the joint of Commissions XI (Work) and XII (Social Affairs).

Subsequently, on May 19, 2015, set into motion by some deputies of the Democratic Party, a bill was drafted for the introduction of a universal measure of poverty reduction called minimum income.

Compared to the first proposal conceived by the same party, this form of minimum income is still set at 500 Euros per month, but favours households rather than single recipients. The bill also tightens the economic requirements for being admitted to the benefit. The simulated cost would amount to 1.7 billion Euros.

At the initiative of the Sinistra Ecologia e Libertà (“Left Ecology and Freedom”) party, a bill on the introduction of a “guaranteed minimum income” is also being discussed in Parliament. This particular benefit would amount to 600 Euros per month, increasable depending on the recipient’s family load: 1,000 Euros for a dependent family member and 1,330 Euros for two. The aid would be accessible through the meeting of certain requirements, such as one’s residence in Italy for two years and having registered at employment centers. Recipients would also have some indirect advantages, such as free circulation on local and regional public transport, free textbooks, and discounts on rent, electricity and gas bills. The minimum guaranteed income cost should exceed 23.5 billion Euros.

5.

The growing political attention to minimum income culminated in the approval, on March 9, 2017, of an important law enabling the Government to reduce poverty, which includes, in particular, the introduction of a social inclusion income.

Such inclusion income must, in the intent of the enabling act, identify the essential level of benefits that need to be guaranteed consistently across the national territory.

The disbursment of the measure would subordinated to the provision of proof on one’s livelihood by means of ISEE (Equivalent Financial Situation Index) models and by adhering to a personalized project of activation as well as social and work inclusion and work for the purpose of reducing the subject’s poverty level.

In view of the implementation of said enabling act, on April 14, 2017, the Government signed a memorandum with Italy’s Alleanza contro la povertà (“Alliance against poverty”), which outlines some of the points that the new regulation will have to contain.

Specifically, the threshold below which one would be able to request access to the service was indicated as being an ISEE threshold of less than 6,000 Euros, well above the one previously experienced for active inclusion support and standing in intermediate position with respect to the Social Card and the ASDI (Assegno sociale di disoccupazione, “Unemployment Social Benefit”).

For fairness reasons, the benefit amount will be differentiated on the basis of income as a result of the difference between the available household income and the reference income threshold of the ISEE income section (the so called ISR). The disbursement will have to cover 70 per cent of the difference thus calculated and the amount may not be less than the amount of the social allowance paid in favour of people over 65, set for 2017 to 485 Euros (5,824 Euros per year).

In order to prevent the treatment discouraging the pursuit of a job, it was established that this difference should not necessarily be covered on the whole, but only partially.

The amount of the contribution should not be cumulated with all the other welfare benefits possibly perceived by the recipient, but only with some – such as disability allowances and other subsidies of a similar nature. The Ministry of Labor is, however, committed to introducing mechanisms to avoid the poverty trap, expecting to continue to provide economic support to recipients even after a possible increase in income above the benchmarks, with hows and whens still to be defined.

The Government is also committed to establishing a permanent technical organization to guide administrations in the accomplishment of this social inclusion income by providing technical and information assistance to citizens as well as local governments.

By the end of the year, the Ministry of Labor will have to submit a monitoring plan to verify the application of the social inclusion income across the national territory. The plan will have to define the operational methods for data collection, the subjects involved as well as the qualitative and quantitative indicators for verifying the implementation of this particular subsidy.

6.

On the one hand social inclusion income, because of its strict requirements and the low resources associated with it, is a much less ambitious measure than the projects still pending revision before the Parliament; On the other, it still represents a key step that would fill the gap compared with other European countries. All European countries, outside of Italy and Greece, have in fact established a minimum form of income. From the already mentioned revenu de solidarité active, or French R.S.A., to the German Arbeitslosengeld II, issued to all those aged between 16 and 65, jobless or belonging to low income groups.

In this regard, the EU has issued a resolution of the European Parliament on the “European Pillar of Social Rights” on January 19, 2017, openly emphasizing that minimum income is crucial to the realization of a “European social model”.

Beyond this very important statement of principle on the need for a minimum income in all European countries, an important debate has been launched on the wider issue of the introduction of a continental-level basic income in the European Union.

The introduction of a basic income funded by the European Union for all citizens of its member states would represent an extraordinary opportunity to restore a social meaning to the Union, and for many reasons.

Parallel to the statements made by the politicians, there is no lack of institutional indications as recently suggested by the draft report containing recommendations to the European Commission regarding civil law rules on robotics.

As a matter of fact the report, after having promoted some important measures to adapt the European Union’s legal order to the advent of robotics, in particular regarding the legal status, intellectual property rights and data security in new technologies, has drawn the attention of the Commission on the possible loss of employment in various sectors following the advent of the so called Revolution 4.0 and the increasing spread of robot usage.

As a response, the report considered that “the introduction of a generic basic income should be taken seriously and calls on all member states to do so”. This minimum income, according to the report, should be funded by introducing a specific tax on robots and new technologies. This idea, which has had some initial trials in Silicon Valley and has been recently sponsored by Bill Gates and Elon Musk has been rejected by the European Parliament, but it is likely, if not inevitable, that in the coming years will come back to being at the forefront of the political debate.

To ensure the survival of our welfare systems in a world where the work of men will be progressively replaced by robots, we won’t be able to avoid dealing with the great liberal utopia of basic income and the universalization of rights.

La grande utopia. Prime considerazioni sul reddito di cittadinanza

The author

Michel Martone is Full Professor of Labor Rights and Industrial Relations. He has acted as Vice Minister of Labor in the Monti Government as well as Visting Fellow at the School of Industrial and Labor Relations at Cornell University in New York


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