Universal Basic Income is a hot topic in the world at the moment. But would it work in the Netherlands?
A two-year basic income experiment was carried out in Finland in 2017-2018. The evaluation study is now available. The register data on employment now cover both years of the experiment and a more thorough analysis has been made of the results of the survey. The basic income recipients were more satisfied with their lives and experienced less mental strain than those who had no access to it. They also had a more positive perception of their economic welfare.
The results of this experiment have once again raised the question: would universal basic income work in the Netherlands?
In recent years, especially with the financial support from governments all over the world during the coronavirus lockdown, calls for a basic income have become louder than ever — and rightly so. The global coronavirus crisis required radical measures and has seen some governments all over the world step up to the challenge.
Here in the Netherlands, there were bailouts for some companies and lots of working taxpayers were financially supported while they observed quarantine. Even the US government distributed money (lots of it), which is strange, considering how much the Republicans dislike social security.
In times of crisis, radical ideas suddenly become the order of the day. For years, economists and sociologists have amassed a good amount of evidence that universal basic income, or “free money” as it is often called, will be more effective than traditional forms of social security and development aid.
But what exactly is universal basic income?
A basic income is an unconditional income. It’s basically money to which you are always entitled, regardless of your assets, social status, or income. Although a basic income does not yet exist in the Netherlands, there have been some experiments in certain cities and municipalities, and the recent results of the Finnish experiment have encouraged people in the Netherlands to start talking about it again. But whether this “radical” alternative to the current Dutch welfare state has a chance of actually being introduced, totally depends on public support for basic income.
The difference between a basic income and a benefit
The Dutch welfare state makes it possible for people to get benefits in the Netherlands. The main difference between a basic income and a benefit is that there are conditions attached to a benefit. Whether someone is entitled to benefits is determined on the basis of their health, financial, or work status. Depending on the type of benefit, the rules on, for example, the obligation to apply for a job, may differ.
Does universal basic income work?
Studies from all over the world have now shown that universal basic income works. Dutch historian and philosopher Rutger Bregman is an advocate of the basic income — an individual, unconditional allowance for everyone. He believes that a universal basic income won’t just help reduce crime in the Netherlands, it would also eradicate poverty and increase creativity — especially in the entrepreneurial world.
Bregman told The Correspondent, “We have recent behavioural economic research and psychological research showing that people living in poverty lose 14 points of IQ due to the stress they live in. If you eradicate poverty, then you suddenly get an explosion of energy, an explosion of entrepreneurship, the gross national intelligence flies up.”
He also believes that in a free and liberal country like the Netherlands, the freedom that is really missing is financial freedom. “In the first place, a basic income is about freedom. We live in a society with many freedoms: freedom of speech, freedom of association, freedom of religion, and these are all milestones of civilisation.”
“What we don’t have yet is real freedom to choose what you want to make of your life. A lot of people are currently stuck in a job that they don’t really see the point of — a third call their job a bullshit job. But in the end, you have to pay your bills, and you have to earn a living. The alternative is that you apply for benefits, but then you end up in an extremely humiliating system and you have to give up a lot of your freedoms” said Bregman.
Freedom to choose
He added that “A basic income gives everyone the freedom to choose how they want to contribute to their country, what they truly want to make of their lives, to realise their dreams. That it would finally give everyone real freedom is by far the most important argument for a basic income. Another reason why basic income really appeals to me is that it is the most efficient, effective and actually cheapest way to eradicate poverty. I really see basic income as an investment. it’s just cheaper to eradicate poverty than for it to exist, and I think a basic income is a very important tool for that.”
Fortunately, to support Rutger Bregman’s claims, there has already been a demonstrated link made between universal basic income and a drastic reduction in crime, child mortality, malnutrition, teenage pregnancies, truancy, and also better school performance, higher economic growth and more emancipation, especially for marginalised and oppressed groups.
Finnish basic income experiment
During the Finnish experiment, 2,000 unemployed Finns received a basic income of €560 per month for two years. They didn’t have to work or look for work at that time. The results showed that the participants were not tempted to work substantially more. Most worked less and decided to pursue interests that made them happy. Some decided to spend more time with their families (especially their young children), learn a new skill, or just relax and engage more in sports, and general wellbeing.
Arguments against universal basic income in the Netherlands
The opponents of the basic income point out that several surveys have shown that people would work less when they get free money. They also argue that the costs are monumental and would financially cripple the country. A lot of right-wing and conservative politicians have also stated that it would attract more “illegal immigrants” to the country, who would seek to misuse such an opportunity. The problem with their claims is that they are all based on “a feeling.” There are no actual figures to support those claims.
A few frequently asked questions about adopting a basic income in the Netherlands
Why is basic income so much in the news, we have it pretty good in the Netherlands, right?
Yes and no. The Netherlands is, without a doubt, one of the most prosperous countries in the world. At the same time, the economic and social policies here usually have a devastating effect on the lives of many people. For example, discrimination in the labour market has resulted in minority groups struggling to get by. The coronavirus pandemic has also put a lot of people in economic uncertainty. And it is no secret that more and more jobs will disappear due to technological developments.
Social security is, therefore, becoming more expensive and ineffective. A new mechanism to maintain the living standards of large groups of people is desperately needed. Basic income is the only social policy that is guaranteed to reach everyone, unlike current schemes based on behavioural and income tests.
How high should the basic income be?
The basic income must be high enough to guarantee a minimum subsistence — even for the most vulnerable groups. Think of people without other sources of income or those who need permanent care. In the Netherlands, this could be an amount of approximately € 1,500 per month.
How would a basic income be paid for?
There are several ways to pay for the basic income in the Netherlands. The Federation of Trade Unions of the Netherlands (FNV) projects that if the Netherlands were to switch to a basic income system, it would cost the treasury €105 billion annually. This money can easily be recouped with the abolition of tax cuts (especially for huge corporations); such as tax and labour tax credit, the scrapping of the self-employed person’s allowance and new tax brackets and percentages.
Basic income can also be paid through an increase in the VAT rate or in the wealth tax (which is currently below the international average and has steadily declined in recent years). So there are several ways to finance the basic income.
Ultimately, it is mainly a matter of political will. After all, there somehow seems to be money available for saving huge corporations during these coronavirus times. If there is one thing the coronavirus pandemic has shown us, it’s that nothing is impossible. And when politicians say that something isn’t possible, they just mean that they don’t want to do that thing. The kind of financial support and bailouts that huge corporations have received during this pandemic has shown that it is very possible to pay for a basic income in the Netherlands.
Will people still work if they receive a basic income?
Experiments with the basic income in Canada and Finland have shown that people do indeed work less (in paid hours). But is that such a bad thing? How many of us wished we weren’t doing our current jobs or doing fewer hours so we can go back to school and get that degree we’ve always wanted, learn a new skill, spend more time with our children, or just travel the world?
The groups that choose to work less are generally married women (not the breadwinners in their families) who choose to take longer maternity leave and young adults who decide to study a little longer. They, therefore, continue to make a meaningful contribution to society.
The value of all unpaid work in the Netherlands is already estimated at more than half of GDP. And by the way, would you spend the rest of your life on the couch if you received €1,500 per month of basic income? That is not a real criticism of the basic income. No one who gets “free money” every month, would choose to spend their whole life on the couch.
What about “illegal” immigrants and refugees misusing such an opportunity?
This is a very popular critique of the basic income from right-wing and conservative politicians. There is no evidence that such a thing would happen. “Illegal immigrants” do not have social security numbers, and one way such a scenario can be avoided is to tie the access of the basic income to either citizenship or the possession of a residence permit or a working visa.
No human is “illegal” and in an ideal situation, a universal basic income (in every country on earth) would reduce poverty and in so doing, drastically reduce the number of people jumping on boats to make it to the west.
Should rich people also receive a basic income? They don’t need that, do they?
Basic income is a right, not a form of charity. A system that only helps the “poor” would maintain the divide between rich and poor. In addition, it would then have to be determined on a case-by-case basis whether someone is “poor enough,” which in turn leads to an inefficient control device. It is not okay for people to live in a society where they aren’t rich enough to live well, and they aren’t poor enough to get help.
A basic income for everyone actually contributes to social cohesion and solidarity, after all, everyone receives it. It can also lead to more tolerance and altruism. The cost of providing a basic income to millionaires, for example, could potentially be recouped through higher taxes on top incomes. It is, of course, also possible that a wealthy recipient might refuse the basic income because they consider themselves rich enough.
Benefits of a universal basic income
Extra income beats benefits
When you receive benefits and want to start working, you often lose out financially. The money earned is taxed and deducted from your benefits. Looking for and finding a job also entails all kinds of hidden costs (childcare, transport to job applications, purchase of clothing, etc).
In addition, the jobs are often temporary and precarious, which means that you run the risk of having to apply for benefits again within a short period of time. With a basic income, it always pays to work, even if it’s low-paid or temporary jobs. You always have something extra for you and your family.
Employees
It doesn’t matter how much anyone in the Netherlands loves their job, it is not a secret that most people with a full-time job would rather work less. The constant pressure, dirty office politics, overtime, burnout, lack of quality family time, etc., are some of the reasons why most people would choose to work less.
The real reason people don’t work less is that they are afraid of losing their jobs, or because it is not financially possible. Most people have bills to pay and only a 40-hour per week job can make that possible. In addition, a full-time contract doesn’t just offer them job security, it also makes buying a house or renting an apartment easier and more possible.
With a basic income, employees have the choice to decide for themselves whether they want to work full-time or part-time. They can also choose to go back to school and gain more knowledge that would help in the advancement of their careers. Many may also go back to school and switch careers entirely. Another bonus is that their negotiating position will improve immensely. They can finally say “no” to poor working conditions, or even quit when they feel that the job or company isn’t right for them.
Employers
People who don’t work overtime perform better. The same goes for people who don’t work exclusively for money. With a basic income, employers get more motivated and productive employees. This will reduce absenteeism and is also good for the company’s growth and development, as well as the employee’s.
Women
Despite the fact that the labour participation of women has increased significantly in recent years, their economic independence is still considerably lower than that of men. The Central Bureau of Statistics (CBS) reports that in 2019, the wage gap between men and women narrowed further in the Netherlands. Women’s average gross hourly earnings were 14% lower than men’s.
Many women also have to deal with the so-called triple burden: they raise children, work (part-time or full-time), and take care of older family members. When a woman chooses (or is forced) to take on caring duties and do less or no paid work, she becomes dependent on a partner or an agency. With a basic income, women get financial security and thus more control over their own lives.
Finally
The corona crisis is turning our world upside down. At the same time, it has had some positive effects on the world. The pandemic shows even more clearly what was already going wrong for a long time. And due to the conservative nature of human beings and world leaders, it had tragically remained the same. The rich keep getting richer, and the poor keep getting poorer. Unsustainable and unchecked capitalism has greatly enriched a few people in the world, all to the detriment of the environment. The corona crisis thus reveals what our society has become in years of growing income inequality, securitisation, and the rise of populist nationalism.
For the first time, the world took a pause, Mother Earth breathed a sigh of relief. Some governments rose to the challenge to protect their people from the disease and the economic effects of the lockdown, and now, some are calling for some of what they’ve seen during the lockdown to become the “new normal.”
A Green New Deal or a universal basic income may sound radical, but in lots of countries where so much is spent on the sponsoring of wars, and the acquisition of weapons of mass destruction, paying for such an endeavour would be like a walk in the park. Just like the virus, we are experiencing an acceleration of these radical developments, and a basic income in the Netherlands would be a welcome “radical move.”
The question is therefore not what the world will look like after the coronavirus crisis. The future depends very much on what we do today. Do we go back to the ways of old, or do we rise from the ashes; a much fairer, better, and more sustainable world? The future is right now — this very moment. One thing is certain for us: a basic income helps eradicate poverty.
Of course, there are situations where a basic income alone will not be enough to tackle poverty. You will not solve much with “free money” when there are no other basic facilities such as clean water, free and quality education, and free healthcare.
If a basic income is to be introduced in the Netherlands and other countries, certain factors must also be carefully considered. Which facilities are needed to make sure that it is effective, efficient, and generally a success? Each municipality, province (and country) must carefully look at the situation of their people and what is already in place, what more can be added to make it a success. Think of good and affordable housing, education, etc.
There is strong research to support the fact that a basic income can create a more just and sustainable Netherlands, with less crime and poverty. And the same applies to the world. Dutch historian, economist and philosopher, Rutger Bregman believes that financial freedom is the truest kind of freedom. Imagine such freedom in the Netherlands. Imagine such freedom in the palm of your hand. What would you do with it?
What do you think about the idea of universal basic income? Would it work in the Netherlands? Tell us in the comments below!
Feature Image: Markus Spiske/Unsplash
Editor’s Note: This article was originally written in August 2020, and was fully updated in September 2021 for your reading pleasure.
Does the name “National Socialist Worker’s Party” ring a bell? How about “The Union of Soviet Socialist Republics”? “Bolivarian Republic of Venezuela”? Take your pick which of these you would like to see The Netherlands become. The promise of a utopia based on “Universal Basic Income” will lead to a dystopian state like one of these three. If something sounds too good to be true it is.
I quick multiplication of €1500 month x 14 mln adults looks like €210 billion to me. This would annul payments towards oap and the unemployed, currently €60bn, so the cost would be €150bn. We already know that increasing the tax on companies will not lead to higher income for the government: there will just be fewer companies. The current total wage sum in The Netherlands is €428 mln. So the income tax rate would have to go up by an additional 35% to pay for this. To put that into perspective: that would be 73% income tax up to an income of 68000, and 86% for anything over that.
Interesting article. I wonder what kind of accounting system could account better for the values that are changing when one simulates an actual real UBI. I have studied Six capitals, can accountants save the world. I should read it again.
It is in the end very hard, philosophically speaking, to account for certain values that are too ambiguous and abstract. The actual account would then diminish the overall value of a given thing, person or group.
Therefore, there is a leap of faith and trust to be taken into consideration if policies want a REAL experiment of the UBI, meaning unconditional so not selective.