Switzerland’s ‘Basic Income’ Idea Was Democratized Aristocracy

By Robert Tracinski

Tuesday, June 07, 2016

Voters in Switzerland just resoundingly defeated a referendum calling for a guaranteed minimum income that would have required the government to send a check to every Swiss citizen every month for as much as 2,500 francs, or a little more than $30,000 per year. That’s a solid lower- to middle-class income — for doing nothing.

There are two ways of looking at this news. We can applaud the Swiss for being sensible enough to reject a load of pernicious nonsense. Or we can be appalled that in a productive and orderly society, nearly a quarter of the population was ready to vote to make itself a ward of the state.

Because that’s the issue here.

The idea of a guaranteed minimum income has been gaining some popularity recently, oddly among libertarians, as a more efficient form of welfare spending. The idea is that welfare money that goes through traditional means-tested programs like SNAP (formerly known as “food stamps”) is eaten up by bureaucracy, diverted by fraud, and subject to paternalistic edicts in which government dictates how its beneficiaries get to spend money (this much for housing, this much for food, and so on) when these people could (probably) spend it more helpfully by making their own decisions.

This is a good example of where today’s libertarians tend to go wrong, refusing to see the forest for the trees. It’s the same sort of backward reasoning — trying to find more efficient, “market-oriented” ways of administering a vast regulatory and welfare state — that gave us carbon credit trading and health insurance mandates.

Because increasing the efficiency of the welfare state isn’t really the issue, particularly in the case of the Swiss referendum.

The idea of a guaranteed minimum income involves an instructive set of tradeoffs: the Basic Income Impossible Trinity. You can do two of three things but not all three. You can have the basic income be a generous transfer of wealth that provides its recipients with an actual, comfortable living rather than a pittance. You can avoid means-testing and not phase out the minimum income as recipients make more money, to avoid penalizing work. Or you can have the system be affordable and not require massive tax increases.

The Swiss campaigners wanted the first two: a really big guaranteed income capable of providing a middle-class living and no phase out, so that there would be no penalty for working. But they didn’t really have an answer for how anyone was going to pay for it. Perhaps they hoped that, because the guaranteed income is provided to Swiss citizens only, the country’s large number of foreign workers — about a quarter of Swiss residents — would foot much of the bill. Or they dabbled in science-fiction musings about Star Trek replicators or about how the robots will do the work for us.

And they had a really stupendously big poster, which is always super-convincing.

The central problem is not just the obvious: if income is separated from work, there is little or no incentive for anyone to do any work. It’s actually worse than that. The deeper problem is an actual punishment for working. This is a well-known problem called the “welfare wall.” As a person goes from not working to working, the loss of welfare benefits functions as an enormous tax on his earnings; in some cases making him worse off than if he stayed home and sat on the couch.

The Swiss version was supposed to avoid this by having no phase out, paying the same minimum to absolutely everyone, so if you choose to work, you get even more. But that comes with an obvious claw-back in the form of higher taxes. One of the ideas floated to pay for the guaranteed income was a 100 percent consumption tax. In other words, we’ll give you a check every month, but then take most of it back by doubling the price of everything in the stores. It creates the same welfare wall, only perhaps worse. It guarantees that for everyone, each additional franc earned is worth a lot less than it was before the government “helped” them.

So this supposedly compassionate system punishes people for attempting to be productive and self-supporting and instead encourages a life of idleness.

But remember the Law of Intended Consequences. Maybe the life of idleness is the point. Let’s go back to that really big Swiss poster. What it says (in English, interestingly) is, “What Would You Do If Your Income Were Taken Care Of?” (Grammar aficionados, note the rather spectacular use of the passive voice. Your income is “taken care of,” and we are not invited to inquire who is taking care of it.) The actual sales pitch for the referendum was not about alleviating poverty. It was about asking people to imagine what they would do with all of their spare time if they could permanently skive off of work. It was about paying people to dabble in their hobbies.

A review of a Swiss film that puts the guaranteed income on the agenda sums up its message:

Schmidt and Häni’s film…is fairly unapologetic about admitting that, yes, if you adopt guaranteed income, some people simply won’t work. The film estimates that, under a basic-income plan, sixty per cent of workers would keep their jobs, thirty per cent would work part-time, and ten per cent would do something entirely different and not what we think of now as a regular “job.” And that’s OK. Or better than OK — it’s part of the point. “The most interesting implication of the basic income,” the Swiss actress Bettina Dieterle says in the film-essay, “is that when I die I will no longer be able to say, ‘I could not do what I wanted.'” This is Marxism Lite. If the unfulfilled promise of Marxism included “from each according to his ability,” Grundeinkommen is more “from each according to how much he or she feels like putting in today.”

Remember how Obamacare was going to liberate the job-locked poets? Nancy Pelosi promised, “If you want to be creative and be a musician or whatever, you can leave your work, focus on your talent, your skill, your passion, your aspirations because you will have health care.” This is the Swiss idea on a more ambitious scale.

This is the flipside of all those pompous graduation speeches encouraging young people to “follow your passion” (after encouraging them to take on massive student loans they will have to toil the rest of their lives to pay off). The promise here is follow your passion, and we’ll get someone else to pay for you to do it.

I have long had the theory that the modern welfare state, particularly in Europe, is a kind of democratized aristocracy. The basic moral idea behind aristocracy was that work and toil are ignoble — ugly necessities best left to the lower sorts — while the privileged few lived in opulence without working, free to pursue higher callings like science, art, politics, and betting on horses. In practice, of course, the number of aristocrats who liked to bet on horses was much larger than the number who wrote deathless literature.

The modern European welfare state accepts this outlook but asks, “Why should this ideal be attainable only by a privileged few? Why can’t we democratize aristocracy and give everyone the right to pursue a life of leisure?” Of course, the privilege gets thinner the farther out you spread it, so we can go only part of the way. Let’s start with six weeks of summer vacation and build from there.

The Swiss referendum was an attempt to go the rest of the way, to induct all Swiss citizens into an aristocratic leisure class entitled to live comfortably off of the work of others. The unavoidable contradiction is that if you extend this sense of entitlement to everyone, there will be no one left to pay for it. And the attempt to get closer and closer to the goal of everybody-consuming-and-nobody-producing merely piles the prospect of economic disaster on top of an insufferable sense of entitlement.

The guaranteed basic income may be a better way of distributing welfare looked at from within very narrow economic blinders. But the principle behind it and the cultural precedent it sets are disasters. Traditional welfare distributes money to people for specific needs and may involve a lot of bureaucracy, fraud, and paternalism; but at least it preserves the idea that money from the government should be an exception, a response to some special emergency. Yet that’s never what welfare advocates really had in mind, and the guaranteed minimum income brings this out into the open. It reveals the endgame of the welfare state: welfare as a way of life, a neo-aristocratic privilege of living without working.

The Swiss were wise to reject this specific proposal, but we can expect the same idea to keep coming back in new forms until people reject the neo-aristocratic mentality behind it.