Unconditional basic income as crisis prevention

A guaranteed basic income can help prevent and mitigate income inequality and injustice particularly during times of crisis. This is the conclusion of a team led by economists Bianca Blum from the Götz Werner Chair for Economic Policy and Constitutional Economic Theory and Prof. Dr. Bernhard Neumärker, also from the Götz Werner Chair and head of the Freiburg Institute for Basic Income Studies (FRIBIS). In a discussion paper, the team from the University of Freiburg now presents a concrete model for this, available in German and English on the FRIBIS homepage. In July, the researchers had already published their basic assumptions in the article “Lessons from Globalization and the COVID-19 Pandemic for Economic, Environmental and Social Policy” in the journal World.

Against financial hardship at the “bottom of the ladder”

The model envisages that during the pandemic, every adult person in Germany receives a monthly unconditional basic income of, for example, 550 euros, supplemented by the suspension of rent, lease, repayment and interest obligations during an income shortfall. The amount paid out is the net share of the crisis-based basic income; the savings from the suspensions make up the gross. According to the researchers, suspending payments in crisis situations means that the crisis-induced risk is not only transferred to employees and entrepreneurs. If an employee loses their wages, they may suspend their rent, while the landlord may suspend capital repayments.

This mechanism would prevent payment problems at the "bottom of the ladder". After the pandemic, the net basic income could be raised to a full participatory amount of 1,200 to 1,500 euros as the economy gains momentum. In step with this, rental, leasing and capital services would then have to be paid again at the full contractual level. The approach does not yet clarify a holistic financing of a basic income. However, according to the scientists, the counter-calculation shows that such an approach would have been "cheaper" in terms of costs than the current crisis aid measures, which had the same function.

The effects of neoliberal policy and globalization

In their previous article, "Lessons from Globalization and the COVID-19 Pandemic for Economic, Environmental and Social Policy," the researchers already argued that the economic and social crises fueled by the Corona pandemic had deep roots. They were due in no small part to decades of neoliberal policies and globalization. In recent years, they say, there has been an increasing privatization of public goods, while risks such as environmental disasters, pandemics and economic crises have intensified. Blum and Neumärker highlight the need for political action to address challenges such as climate change as well as growing inequality and injustice. One important means of doing this is an unconditional basic income. 

On the one hand, this could be an approach to better cushion crises and the associated loss of income. On the other hand, a basic income could be justified from a regulation-theoretical perspective under the argument of climate justice, if it were financed by emission taxes. In this context, the relevant feature would not be the amount securing a livelihood, but the basic entitlement on the basis of “equal entitlement to natural resources.”

Online Discussion about the issue

An online event on the topic of the publications will take place on October 7 at 6 pm. Bianca Blum and Bernhard Neumärker, together with the Bundestag petitioner for crisis-based basic income, Susanne Wiest, as well as Enno Schmidt (Götz Werner Chair) will comment on the publications and report on their experiences with the Bundestag petition.

Original publication:
Blum, B., Neumärker, B. (2021): Lessons from Globalization and the COVID-19 Pandemic for Economic, Environmental and Social Policy. In: World 2021, 2, 308-333. DOI: 10.3390/world2020020

Neumärker, B., Blum, B., Yalcin, B., Yalcin, S. (2021): The Counterfinancing of the Net Basic Income in Times of Debt-Financed Relief Measures during the Corona Crisis. In: FRIBIS-Homepage