A Model for Human Dignity

If there’s a country that can afford to introduce a universal basic income (UBI), it’s Germany, argues Prof. Dr. Karl Justus Bernhard Neumärker. The economist thinks UBI would have a real chance. Even more, he sees it as a potential solution to future challenges that will bring about sweeping changes in the labor market, such as increasing digitalization and robotization.

A universal basic income could give employees the chance to think about their professional development and protect themselves from exploitation. Photo: contrastwerkstatt/Fotolia

“What would you do if you didn’t have to worry about earning a living?” A roughly 30-year-old man stares fixedly into the camera. The corners of his mouth turn up in a smile: “I’m Micha from Berlin, and that’s exactly what I’m trying to find out for myself.” Micha, or more precisely Michael Bohmeyer, looks like a typical hipster from Friedrichshain or Kreuzberg, with a trendy distressed t-shirt, turquoise pants, and casually tousled blond hair. Walking down the streets of his neighborhood, lined with blooming trees and well-kept old buildings, he talks about his new life. His plan was originally to rest up and just be lazy, he says, but now he feels a great urge to get up and do things: “I feel free and relaxed, my head is full of business ideas, I do volunteer work, have become a better father, and lead a more healthy lifestyle.”

Bohmeyer founded an association called “Mein Grundeinkommen” (“My Basic Income”) in 2014 as a means of testing out the “society of tomorrow.” The association collects donations on a website. As soon as 12,000 euros are raised, they are raffled off and given away. The recipient gets 12,000 euros for twelve months free from stress and worries. To date, the association has funded 94 basic incomes via crowdfunding and is now collecting for number 95.

Universal basic income (UBI) is only the topic of a private initiative in Germany, but in other European countries it is already being negotiated at the state level: Switzerland held a referendum on the issue in 2016, and Finland began testing several variants of UBI in 2017. The Federal Republic should also take the plunge, argues Prof. Dr. Karl Justus Bernhard Neumärker: “If there’s a country that can afford to introduce UBI, it’s Germany. Our state has a large amount of assets at its disposal, and our concept of social market economy at least provides us with the right intellectual basis for it.”

No Questions, No Requirements

Neumärker heads the Department of Economic Policy and Theory of Economic Order at the University of Freiburg. He is regarded as something of a rare bird by colleagues in his field in Germany – topics like “social justice” or “social participation” are not exactly at the top of the list of research interests for economists. “When I predicted ten years ago at a conference that even democracies would soon call for caps on managers’ salaries and for the introduction of a minimum wage, I was practically driven out the of the place,” he remembers with a laugh.

Neumärker thinks UBI would have a real chance. Even more, he sees it as a potential solution to future challenges that will bring about sweeping changes in the labor market, such as increasing digitalization and robotization: “It is unrealistic to expect that we will be able to find enough new work for the many people who will lose their jobs. After all, the purpose of developing humanoid robots is to replace human workers, not – as in the first digital wave – to make the work easier for them.”

The increasing digitalization and robotization will bring about sweeping changes in the labor market. Karl Justus Bernhard Neumärker thinks it is unrealistic to believe that it will be possible to find paid jobs for the many laid-off workers. Photo: Nataliya Hora/Fotolia

At the moment, Neumärker is conducting studies on the ways in which individuals with a UBI spend their time in comparison to those receiving benefits from state welfare programs like Germany’s so-called Hartz IV, on the decoupling of work and payment, and on the UBI as a mechanism for reducing competition-induced forms of discrimination – such as that of women. The results of his research indicate that UBI could serve as a foundation for justice and social peace and guarantee both in the long term. The researcher sees it as a model for human dignity: “It would no longer be possible to exploit people who work in the low-pay sector, for example. If your boss tried to introduce another pay cut, you could just quit and think in peace about how to best continue your professional development.” However, Neumärker stresses that this would only work if the UBI were high enough. The amount currently under discussion in Germany is 1000 euros a month.

A Veil of Ignorance

The economist refers to his approach as “new ordoliberalism.” This places it in the tradition of the “Freiburg School,” which saw regulatory policy as the precondition for a functioning society. To state the idea in simplified terms, a strong state maintains a constant level of competition in the economy, thus guaranteeing its citizens freedom and stability. Neumärker adds a new component to this theory: social justice. He is interested in questions that have been largely disregarded up to now: What criteria does a society apply in distributing its wealth, what conditions lead political and economic actors to reassess their behavior, and when should something be regarded as fair or unfair?

The “social contact lab” is an experimental laboratory in which Neumärker has test subjects negotiate new social orders. The “lab” consists of a lecture hall, computers for chatting, and a lot of dividing walls, because anonymity is key. The participants have the task of negotiating the basic rules for society, but they do not know where they will later stand in the order they have established.

“A large majority of the test subjects always allowed themselves to be led behind the veil of this ignorance when questions of social justice on the table,” reports Neumärker. “They selected models that incorporate a UBI rather than the classical market economy model, in which income level is determined by productivity. There is evidently not only the argument of efficiency but also that of fairness.” In other words, it was important for the test subjects to first ensure that all members of society enjoyed a consistent level of security. Only then were they also prepared to accept low wages.

Old Model, New Arguments

But what is the price of fairness? In other words, what consequences would it have for the gross domestic product if everyone were provided with a basic income as a gift from birth? This would be a horror scenario for advocates of classical competitive society, who warn that a UBI would lull people into a state of chronic laziness. If one believes the beaming faces on the “Mein Grundeinkommen” website, however, the opposite appears to be the case. The winners of a basic income have been transformed into veritable workhorses: Judy can finally put all her energy into running her ice cream parlor, because she has paid off the loan she took out to open it. Hildegard has realized a lifelong dream and staged a play. Christoph has quit his job at a call center and started studying to become a kindergarten teacher. So what is realistic?

Neumärker is investigating how people with a UBI organize and spend their time. He and a doctoral student are developing a formula that adds new factors to the common work–life model. In its current form, this model only takes account of the time in which an individual works – that is, earns money – and the time in which he or she does not work and is therefore unproductive. There is no place in this binary formula for volunteer work or hobbies. Neumärker is now adding factors like volunteering, leisure, and creativity to the model.

More time to relax? The researchers at the Department of Economic Policy and Theory of Economic Order are studying how people would spend their time if they had a guaranteed basic income. To do so, they are adding new factors the common work–life model, such as volunteering, leisure, and creativity. Photo: Syda Productions/Fotolia

“The model could be used to calculate the actual effects a lump payment would have on people’s behavior and the behavior they would exhibit under various conditions.” Although the researcher does not yet have conclusive results, he is convinced that a UBI would motivate people to make different use of their time, that most scarce of all resources. “That’s the theoretical regulatory policy issue underpinning my research: What if it were not just the rich ‘leisure class’ that could afford to work less and enjoy more free time but also, for instance, employees from the low wage sector? That would lead to a real redistribution of free time and enable everyone to participate in social life.”

Experimentation Is Permitted

The idea of a UBI is not new in Germany: A representative survey conducted by a large German cashback website in 2017 found that 73 percent of all Germans have heard of UBI and 75 percent wish one would be introduced. In addition, German politicians of various leanings have been discussing the idea for decades, and several variants have been suggested by the CDU, the FDP, the Greens, and the Left. “Our constitution already allows for the introduction of a UBI as an element of the welfare state today, and experimentation is also permitted,” Neumärker emphasizes. That’s where he sees the key to success: “We need to test different variants of UBI to determine which model succeeds in becoming accepted. It’s not a matter of taking a gamble, however, but of being realistic and involving the people in the process.”

 There is much to learn from the attempts in Switzerland and Finland, because neither of them were particularly successful. The Swiss wanted too much at once: The state set the UBI at the equivalent of 2,250 euros, and in the referendum it was only possible to vote yes or no. “The sum was too high even for the Swiss. They were afraid it wouldn’t be possible to pay for it in the long run and thus rejected the UBI.” The Finns, on the other hand, were interested above all in lowering the country’s long-term unemployment figures, Neumärker suspects, and therefore provided incomes of 650 euros a month exclusively for unemployed people. However, this approach contradicts the basic idea of UBI. Even so, Finland’s attempt at implementing the concept points the way to the future: “We shouldn’t forget that Finland is already much farther along with digitalization than Germany,” says Neumärker, and the consequences this development will have on the labor market are already visible there. “In the long run, a UBI would give us a means of dealing with them where Hartz IV fails, because in a world in which human workers are being replaced by machines, even the best and fairest initial and further training can only get a few of them off the unemployment rolls.”

Rimma Gerenstein