Abstract
A citizens’ stipend system of the type proposed here would thus bring about a broad spectrum of positive changes without risking serious transitional problems. Such a system would be administratively easy to handle, it would be transparent, it would be fair, it would make the economy and working life more creative and innovative, and it would lead to full employment by reshaping the wage structure and economic risk sharing. Combined with the associated statutory social security system, it would cover all special needs in aggravated conditions of life. In addition, it would offer the greatest possible transparency and simplicity in distribution issues, and it would thereby help secure social peace, contribute to a new, clearer, and more rational perception of politics, counteract disaffection with democracy, reduce the susceptibility to populist messages, raise the level of political discourse, and even pave the way for a higher level of political civilization. It is hard to imagine that this broad range of positive effects of the citizens’ stipend system may in any way be outweighed by negative side effects.
4.1 Basic Income and Business Cycle Policy
A citizens’ stipend system of the type proposed here would thus bring about a broad spectrum of positive changes without risking serious transitional problems. Such a system would be administratively easy to handle, it would be transparent, it would be fair, it would make the economy and working life more creative and innovative, and it would lead to full employment by reshaping the wage structure and economic risk sharing. Combined with the associated statutory social security system, it would cover all special needs in aggravated conditions of life. In addition, it would offer the greatest possible transparency and simplicity in distribution issues, and it would thereby help secure social peace, contribute to a new, clearer, and more rational perception of politics, counteract disaffection with democracy, reduce the susceptibility to populist messages, raise the level of political discourse, and even pave the way for a higher level of political civilization. It is hard to imagine that this broad range of positive effects of the citizens’ stipend system may in any way be outweighed by negative side effects.
All these positive effects result from the use of citizens’ stipend in redistributive policy, but its possible applications would thereby be far from exhausted. For at least two other significant political purposes could the citizens’ stipend be used very effectively: for economic stabilization (see Wehner 1992b, Chap. 6.1 or Wehner 1997, Chap. 6.1) and for population policy (see Wehner 2007). A further significant application would be foreign aid to nations in distress after wars, upheavals or natural disasters (see inter alia Wehner 1990, 1991, 1992c, 1999).
The use of basic income in business cycle policy and demographic policy would by comparison be rather simple and easy. In order to prevent and mitigate economic slowdowns, citizens could be paid an economic stabilization allowance in the form of a temporary supplement to the citizens’ stipend. Such a stabilization allowance would increase the purchasing power in the most direct and effective way possible, thus increasing consumption promptly, ubiquitously, and in predictable quantity, thereby also boosting investment. It would serve this purpose best if it was not financed by government debts, but rather by interest-free central bank loans to the welfare state.Footnote 1 Moreover, such a stabilization allowance would be beyond suspicion of leading to unwanted side effects on the distribution of income and wealth, as is the case with most conventional measures of business cycle policy. An economic stimulus by means of a supplement to the citizens’ stipend would thus be far superior to conventional policy measures for this purpose.
As with all business cycle stimuli, such stabilizations allowances would also require provisions to ensure that the stimulus does not induce unsustainable claims against the welfare state. For this purpose, these allowances could be declared as advance payments of citizens’ stipend. In the event of subsequent economic overheating, it would then be possible to offset formerly paid stabilization allowances from current citizens’ stipend payouts in small installments. Also in this respect, such policy would be superior to conventional policies in terms of effectiveness and redistributional fairness.
Such an application of citizens’ stipend to business cycle policy may, at first sight, seem easily comprehensible and easily manageable. Nonetheless, it is by no means obvious that democratic institutions would handle such new policy scheme with sufficient competence. This issue of competence is relevant both for governments of existing states and for central banks. Therefore, in connection with a citizens’ stipend project, the competence of political institutions merits careful consideration also with regard to stabilization policy.
4.2 Basic Income and Demographic Policy
The other field of politics in which an application of the citizens’ stipend seems almost mandatory is demographic policy. If the birth rates of a country deviate from those which are politically desirable—for instance if fertility is expected to lead to an unwanted population decline or population growth—then demographic policy could counteract with increases or decreases in the citizens’ stipend for children. In this way, basic income could be used as a tool to influence population growth without undesirable distributional effects.
This application of the citizens’ stipend would require exceptional political foresight and long-term determination. In order to influence the birth rate as precisely and directly as possible, increases and decreases in citizens’ stipend would have to apply only to children yet to be born. Moreover, these measures would have to be reliably warranted not only for a legislative period, but at least until the intended recipients, i.e. children to be born, reach the age of majority. Only in this way can the desired effect on reproductive behavior be achieved.
Such use of the citizens’ stipend would again give rise to the question whether existing democracies could live up to this task. Population policy is fundamentally different from almost all policy areas democracy was created for and is traditionally concerned with. Moreover, in democratic countries it has long been—and in part still is—considered illegitimate for politics to interfere with the reproductive behavior of citizens. Therefore, it is not surprising that democratic countries have shown little foresight, reason, or energy in demographic policy in the past, and it is not a matter of course that this poor performance would improve in a citizens’ stipend system.
If conventional democratic institutions stipulated a rise in future children’s basic income valid from birth to the age of majority, citizens could hardly take for granted that this decision will not sooner or later be revised by a different parliamentary majority. Insofar, implemented modifications of children’s basic income could fail to induce their intended effects on the birth rate. Thus, as much as demographic policy could be enriched and simplified by this instrument, its potential in existing democracies remains uncertain.
4.3 Basic Income for Nations in Need
A citizens’ stipend is an instrument of domestic redistribution. It is based on domestic solidarity, and it translates this solidarity into practical politics. Therefore, the geographical reach of a citizens’ stipend system ends at existing state borders. But there are exceptional situations in which citizens are to some extent willing to share prosperity with citizens of other states. This solidarity finds expression in spontaneous private donations to internationally active aid organizations, but also in the political consent to foreign aid for states in need.
This international cross-border solidarity is, of course, far more variable and divergent than the national one. It depends on objective neediness, but also on such criteria as geographic proximity of beneficiaries and the topicality and media presentation of neediness. Cross-border solidarity mostly fails to develop where the need for help seems endless, and it fades away when it misses the hoped-for effect, e.g. due to corruption in the recipient countries or incompetence in the donor states. The prevalence and extent of such abuses has led to increasing doubt concerning the usefulness of traditional foreign aid. The most common and most important objection is that too small a portion of the citizens in the recipient countries profit from such aid.
Therefore, a promising alternative to traditional development aid could in many cases be a citizens’ stipend aid. This aid would be paid as an unconditional basic income equal to all citizens in the recipient state.
With this kind of help, it would certainly not be possible to reach all the goals pursued by more targeted conventional development aid in all circumstances. Basic income aid is particularly suitable as a transitional aid in state-wide emergencies as they may arise from wars and civil wars, from natural disasters and from the collapse of economic and political systems and as they can be caused by non-military coercive measures such as embargos or other trade sanctions.
Basic income aid could play a particularly significant role in cases where compensation is sought for morally questionable military interventions as they have in recent times been executed by the US, Russia, and European states in and near the Arab world. When intervening powers have provided compensation for such inflictions in the past, they have mostly done so by targeted reconstruction aid. There are good political and ethical reasons, however, to at least combine such reconstruction aid with basic income grants. Such grants could best serve the purpose to strengthen the citizens’ support for constitutional regimes in beneficiary states and to restitute the moral standing of donor states.
Universal basic income aid to foreign countries could be planned and implemented quickly and unbureaucratically, it would place only manageable demands on the state administration, and it would be incontestably fair. In addition, its proper implementation could—and this alone can make it an unrivaled concept—be verified in the simplest possible way. The citizens themselves could provide the best possible assistance in this verification.
Universal basic income assistance could also play an important role in cases where aggravated economic sanctions are imposed because a political regime fails to meet elementary moral standards. In such cases, the sanctions are directed against political leaders, but the victims are ultimately the citizens. This dynamic may cause citizens to even develop hostility towards the sanctioning states, and it may even revitalize their loyalty to their own leaders, however much they lack political morality. A promising solution to this problem would be to combine sanctions against the regime with subsequent basic income assistance to the citizens. A people suffering under such sanctions could be given the promise that it will later be compensated for this suffering by adequate transitional basic income grants.
Such pledge for basic income grants could incite the citizens of a recipient state to contribute to a regime change for the better. If they did not collectively take advantage of this opportunity, they would run the risk of losing the promised basic income grants. In this way, the promise of basic income aid could act as a strong incentive for citizens to oust immoral and incompetent political leaders.
Such aid could replace traditional aid, the beneficiaries of which have mostly been a minority of the people and which has thereby failed to meet its moral objectives. That alone would be reason enough for donor states to give basic income aid preference in appropriate cases, but basic income aid could have a another highly significant positive effect. The aid could create familiarity with the concept and the practice of basic income in the recipient and also in the donor country, and successfully implemented, it could help to overcome the indifference of living generations towards domestic citizens’ stipend projects. Basic income aid could thereby shorten the otherwise incalculably long path to first citizens’ stipend projects by decades.
In donor countries, such assistance would have to assert itself mainly against the objection that it was too untargeted and too expensive, but this indeed depends on the circumstances of the case. The more populous the recipient state, the more difficult would it be to finance basic income aid, and the more divergent the needs were in the regions of a recipient state, the stronger would be the reservations against aid for all its citizens. But nonetheless there won’t be a lack of cases in which a basic income aid for all would prove to be the best possible concept from the perspectives of both the donor and the recipient country. Under favorable circumstances it would even be conceivable that a small beneficiary state could gradually replace an expiring scheme of basic income aid by a basic income system of its own. The administration in the beneficiary state would be prepared for such a transition.
Notes
- 1.
See also Wehner, Burkhard. Die Logik der Geldpolitik. In: Wehner (1995, Chap. 13). Revised version online in http://www.reformforum-neopolis.de/files/die_logik_der_geldpolitik_1.pdf. Supplementary: Wehner (2004).
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Wehner, B. (2019). Basic Income in Other Policy Areas. In: Universal Basic Income and the Reshaping of Democracy. SpringerBriefs in Political Science. Springer, Cham. https://doi.org/10.1007/978-3-030-05828-9_4
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