Justice for Everyone?

The European petition introducing an unconditional basic income failed, but the good news is that discussions will continue.
By IVANINA MANCHEVA / Photography SHUTTERSTOCK

Following a lot of hype, particularly in Bulgaria, the petition introducing unconditional basic income in the European Union failed. If more than 1 million signatures were collected in support of the idea by January 13 it would have reached the European Commission and the European Parliament. However, there were only 285,000 signatures collected with the largest amount from Bulgaria. DESPITE THIS FAILURE, HOWEVER, debates on the revision of the social guarantees system will continue, which is good news. The initiative, launched by activists from different countries, is not based on research, comparison of alternatives or analysis of the effects both desired and not. It is based on the main rights we have as citizens of the EU. When it comes t the funding for such programs, it is concise: There are a number of research which indicate various methods of financing the Unconditional Basic Income. We do not recommend any particular one. There is no good argument for rejecting the initiative. The limited ability and means of the initiators to defend their project are not reasons to cancel it entirely. The idea about an universal basic income (stressing on universal and not unconditional) deserves deeper discussion, at least as a mental experiment. There is one thing that should be specified: the basic income is not in addition to the existing social assistance. To a great extent it is their alternative. The problem is that nobody explains to what extent in particular, and being unaware of these details we are not able to judge the effect on the economy. The borderline between populism and vision is often hidden not in philosophical categories but in the details. An example of this occurred in 1968 1,200 economists in the USA signed a petition to impose a negative tax one of the forms of the guaranteed basic income. However, Milton Friedman, the man who launched the negative tax idea, refused to sign it as he

disagreed with the details of the plan. THE IDEA ABOUT BASIC INCOME addresses at least three problems that will be plaguing us long after the last financial crisis has been forgotten. The first is the most obvious and refers to social exclusion and the inequality. The latest figures show that the income of the poorest people has not changed and the advantages from the economic growth in the beginning of the century favor the richest. While this can be explained, the more alarming fact is that those born in poor and illiterate families have an even smaller chance of getting out of their environment. Epic discussions are being held on the issue and one of the ideas that deserves the greatest attention is the idea about of the role of technologies in the redistribution of income and the predetermination of the fate of different social groups. The concentration of an increasing amount of money in the hands of a small group of people undermines the economic base. Rich people have a limit of consumption, the stagnation of the income of poor people means a slower growth. This hypothesis, even though it is supported by famous economists, still needs testing and statistical support. THE SECOND PROBLEM is the many defects of the existing system for redistribution and the hidden price of the state social costs. This problem is easy to evaluate, but difficult to solve. An universal basic income means eliminating the judgment placed on the office worker, removing the attempts to outwit the system, and reducing the social and bureaucratic costs. We are all convinced that the sudden increase in the number of disability pensions in recent years is a reaction to the restrictions facing pensioners, and the increased number of sick leaves last year is another kind of slyness. That is why libertarians (around the world, not in Bulgaria) are the biggest supporters of the idea. However, it

/ Milton Friedman

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comes with a lot of practical difficulties and its negative effect on labor incentives is only one of them, as experiments show. Combining the basic income with a progressive system of taxation would create problems too. The application of the basic income in the EU, where the free movement of people has already clashed with the drastic differences in the incomes is another practical hardship, maybe among the gravest ones. For example, it is to be noted that the experiment in the USA was isolated and the basic income there does not provide a common base, it does not change the relative incomes on a national level. AMONG THE OTHER PROBLEMS is the potential practical application of the idea and whether the taxation should be family or individual, how childcare should be encouraged (for example, if education vouchers or differentiated child allowances should be provided), whether the basic income should be an alternative to only the salaries or to all kinds of income and social payments, including unemployment benefits and pensions. Add healthcare to the equation (it is free for many) and you will see how many things we have grown accustomed to should change so that we can get a simple and universal solution. If the idea is applied consistently, the basic income should replace most of the social payments and only exclude the benefits for disabled or sick people, orphans, or disaster relief. LET US THINK ABOUT THIS. The 2014 budget of Bulgarias social ministry exceeds 1 billion levs and the National Social Security Institute (NSSI) must also make social payments. It is not known how many people in Bulgaria live on social benefits alone. There are 1.7 million Bulgarian people who do not work and do not receive pensions. If we exclude children up to 15 years of age, there are 600,000-700,000 more. These numbers include people with disabilities (statistical figures are shocking, according to the social ministry's agency there are about 500,000 and according to the NSSI there are nearly 700,000 disabled pensioners), and a smaller number are just people excluded from the labor market and the social system. There are 300,000 people who receive payments from the Bulgarian Red Cross based on various criteria. This number is probably the closest to the number of potential applicants for guaranteed income. The amount currently spent on allowances for the poor under various programs may be larger and the scope may be smaller compared to those that might accompany a simple system of guaranteed income. It is significant that there is no easily accessible information regarding this information. We can bravely say that the problem with the efficiency of the social system has other solutions as well, especially if we consider the longneglected Romany issue. The basic income is a reason to think about all this. THE THIRD PROBLEM IS LONG-TERM and it contains the serious reasons to support such a drastic measure. It refers to the change in the economic laws as a result of the technologies and the development of the information society. This is an enormous new issue and I will only limit myself to two trends that are important in the context of the guaranteed income for non-working people the problem with the technological unemployment and the unwanted workforce and the problem with the non-monetary economy (people who do not work are often the main participants in the non-monetary exchange). Emil Hursev recently wrote about the new social transformation, the transition to the consumer society. We do not have any clear answers to the number of questions that topics like maintaining the non-working people raise. We are not even aware of all the questions that might arise. One thing is certain, the search for quick solutions to such a large-scale change is a guarantee for a setback. That is why it is a good thing the petition failed, but the questions it raises remains for days and years to come.

February 2014

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