Basic Income – Have Austerity’s Chickens Come Home to Roost?

Posted in: Basic income, Public services, Welfare and social security

Dr Jurgen De Wispelaere is Policy Fellow at the IPR and Political Economy Research Fellow at the Independent Social Research Foundation (ISRF).

In the space of a mere five years, the idea of granting each citizen – or long-term resident in some proposals – an individual, universal and above all unconditional basic income has taken off like a rocket in established policy circles. The phrase “basic income’s time has come” is no longer the hallmark of the quasi-delusional battle cry of the seasoned utopian but can be heard – albeit perhaps with some trepidation – in the corridors of power across Europe and beyond.[1] Of course, talk is often cheap, and political talk is no exception. Expressions of support from stakeholders and decision-makers in previous years mostly took the form of cheap support: political statements not backed by commitments to expending political resources (time, money, political capital) and therefore of little value to furthering basic income policy.[2]

However, it would appear that “the times are a changin’”, as the famous Dylan song would have it. Surely, the recent policy interest in piloting basic income experiments across the world represents a serious political commitment to exploring the potential of basic income as a key component of the next stage of welfare reform? Finland has already embarked on the basic income train by paying out an unconditional basic income of €560 to 2,000 unemployed test subjects currently receiving basic unemployment benefits for the next two years.[3] Several municipalities in the Netherlands (Utrecht, Tilburg, Wageningen and Groningen, amongst others) and the Canadian province of Ontario are to follow suit in a few months, while local, regional and national governments across Europe are exploring similar options (e.g. Fife and Glasgow in Scotland; Barcelona in Spain).

What to make of this recent interest in basic income? What explains the surge in interest in universal and unconditional cash transfers across the ideological spectrum, including a willingness of some government actors to proceed with pilot schemes? Explanatory variables are no doubt manifold. One fashionable answer is to refer to the “rise of the robots”, where automation is said to irrevocably change labour markets including rendering vast numbers of jobs obsolete.[4] The threat of automation-driven technological unemployment at a scale we haven’t witnessed before is driving much of the tech-industry interest in basic income. However, the automation debate is in its infancy and the predictions of the labour market equivalent to a mass extinction event remain controversial.[5] In addition, as an explanation for the policy interest in basic income, time works against the automation argument. The rise of the robots is predicted to take another couple of decades to fully manifest, and politicians are not exactly famous for considering public policy in the long-term!

It is hard to avoid the observation that the recent “elevation” of basic income coincides with the occurrence of the financial crisis in 2007-2008, especially the European sovereign debt crisis of 2009, and the austerity response that followed suit. In a nutshell, austerity is a mechanism of kick-starting growth and recovery by means of drastically cutting public spending. Mark Blyth calls it “the austerity delusion”, a dangerous idea because it clearly doesn’t work – as evidenced by significantly increased debt-to-GDP ratios across European economies – while the idea itself remains stubbornly immune to rational refutation.[6] The idea is not just dangerous because it stubbornly fails, but in large part because the burden of failure is unequally distributed across the population and its social effects disproportionally felt by those at the bottom of the income distribution. Austerity increases risk of unemployment, poverty, social exclusion – even morbidity and mortality rates[7] – for a growing number of citizens.

The resulting division between insiders and outsiders is affecting both people’s wellbeing and the capability of government to institute policies aimed at protecting the most vulnerable in society.[8] At this point it is worth noting that austerity is nothing new when viewed from the perspective of welfare state development. Paul Pierson, almost two decades ago, referred to the new politics of the welfare state under conditions of “permanent austerity”, arguing that welfare state retrenchment employed a different logic from the expanding welfare state of the post-war decades.[9] From the Pierson perspective, austerity and welfare state retrenchment is mostly about changing political dynamics and finding ways to avoid (or shift) blame for unpopular reforms. Post-crisis austerity politics is partly a continuation of this welfare reform agenda but at the same time constitutes a break with governments having been granted a “license to cut” much deeper across a wider range of social programmes. Recent comparative research shows that while austerity had relatively little effect on social assistance budgets the impact on minimum income schemes is nevertheless serious and the tightening of minimum income schemes is at odds with the goal of “active inclusion” as mandated, for instance, by the 2008 European Commission Recommendation on active inclusion of people excluded from the labour market.[10]

The picture that is emerging after several years of austerity politics is one of European societies becoming increasingly socially, economically and politically divided – enter populism! – and governments apparently unable to turn the tide. The overall result of these recent policy developments has been increased pressure on the most vulnerable in society – the long-term unemployed, young labour market entrants, those operating at the margins of the labour market (the “precariat”), but increasingly as well, many who are poor while in work. Policymakers are becoming aware of the limits of increased conditionality and restrictions imposed on minimum income schemes. In this context, the interest in basic income could be seen as an attempt to square the austerity circle: the need for a policy that combines robust minimum income protection with the modernisation of welfare programme complexity, while retaining a strong focus on labour market activation and human capital-building as per the “social investment” agenda.[11] Instead of focusing on the de-commodifying effect of basic income – separating income from work – policymakers are emphasising its ability to combat poverty, unemployment and bureaucracy traps. In this perspective, basic income is not viewed as a utopian alternative to the welfare state, but to the contrary, a key instrument in its long-term survival by allowing the minimum income floor to be mainstreamed and modernised. Of course, squaring circles is hard work and in the first instance we need to know that basic income can deliver; hence, the focus on piloting and experimenting with basic income schemes in Finland, the Netherlands, Canada, and so on as part of a broader approach to evidence-based policymaking.

It is early days so perhaps making an assessment as to whether the many experiments will generate results that support the basic income policy would be premature. It is moreover impossible to predict whether positive piloting experiences will lead to robust policy implementation. At this point we need serious political science research examining the conditions under which basic income can build up a robust constituency (for more on this, see Luke Martinelli's excellent blog on the subject), as well as long-lasting coalitions amongst decision-makers across the ideological spectrum.[12] However, even if – paradoxically – austerity has caused policymakers to conceive of basic income as a valid instrument in their “activation toolbox”, the resulting programme may still fall short of the more progressive aims, for which most basic income advocates push. This is serious cause for concern among those who insist that basic income is primarily an instrument of freedom and equality.[13] The answer to this worry is twofold, in my view. First, we should appreciate what even a modest basic income may accomplish given the dire prospects of continuing along the road we currently travel. Second, once anchored in our policy environment, political forces can focus on upgrading the modest (almost residual) basic income model to something more progressive, emancipatory and liberating. If successful – and, granted, for now it remains a big “if” – such a political strategy would certainly make sure that austerity’s chickens finally come home to roost!

This blog originally appeared in ISRF Bulletin Issue XIII: Today's Future - Challenges & Opportunities Across the Social Sciences. It builds on research conducted jointly by Dr De Wispeleare and Dr Luke Martinelli on the political economy of basic income in European welfare states. You can find out more about the IPR's work on basic income here.

[1] Jurgen De Wispelaere (2016) “Basic Income in Our Time: Improving Political Prospects Through Policy Learning?” Journal of Social Policy 45(4): 617-634.
[2] Jurgen De Wispelaere (2016) “The Struggle for Strategy: On the Politics of the Basic Income Proposal.” Politics, 36(2): 131-141.
[3] Olli Kangas, Miska Simanainen, and Pertti Honkanen (2017) “Basic Income in the Finnish Context.” Intereconomics 52(2): 87–91; Laura Kalliomaa-Puha, Anna-Kaisa Tuovinen, and Olli E Kangas (2016) “The Basic Income Experiment in Finland.” Journal of Social Security Law 23(2): 75–88.
[4] Martin Ford (2016) Rise of the Robots: Technology and the Threat of a Jobless Future. New York: Basic Books; Erik Brynjolfsson and Andrew McAfee (2016) The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies. W.W Norton; Jerry Kaplan (2015) Humans Need Not Apply: A Guide to Wealth and Work in the Age of Artificial Intelligence. Yale University Press.
[5] Labour economist David Autor, for instance, insists firms and employees will adapt to the anticipated automation by shifting tasks within jobs; this argument offers an important antidote to the most pessimistic forecasts about layoffs. David H. Autor (2015) “Why Are There Still So Many Jobs? The History and Future of Workplace Automation.” The Journal of Economic Perspectives 29(3): 3–30.
[6] Mark Blyth (2013) “The Austerity Delusion: Why a Bad Idea Won Over the West.” Foreign Affairs, May/June 2013.
[7] Aaron Reeves, Martin McKee, and David Stuckler (2014) “Economic Suicides in the Great Recession in Europe and North America.” The British Journal of Psychiatry 205(3): 246–47.
[8] Johannes Lindvall and David Rueda (2013) “The Insider–Outsider Dilemma.” British Journal of Political Science 44(02): 460–75.
[9] Paul Pierson (2001) “Coping with Permanent Austerity: Welfare State Restructuring in Affluent Democracies.” In: P. Pierson (Ed.), The New Politics of the Welfare State. Oxford: Oxford University Press.
[10] Sarah Marchal, Ive Marx, and Natascha van Mechelen (2016) “Minimum Income Protection in the Austerity Tide.” IZA Journal of European Labor Studies: 1–20.
[11] Anton Hemerijck (2015) “The Quiet Paradigm Revolution of Social Investment.” Social Politics 22(2): 242–56.
[12] Joe Chrisp (2017) “Basic Income: Beyond Left and Right?” Juncture, 23: 266–270; Jurgen De Wispelaere (2016) “The Struggle for Strategy: On the Politics of the Basic Income Proposal.” Politics, 36(2): 131-141.
[13] Philippe Van Parijs and Yannick Vanderborght (2017) Basic Income: A Radical Proposal for a Free Society and a Sane Economy. Harvard University Press.

Posted in: Basic income, Public services, Welfare and social security


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