The Paradox of Universal Basic Income and the Loss of Work Ethic. Nota El Cronista

Versión en castellano

It has been years since I’ve voiced and written about the concern that Argentina does not have unemployed or excluded people, but only beneficiaries of welfare plans. In response to the Covid-19 pandemic the idea of a universal basic income has been revived within the public health emergency as a tool to deal with the paralysis of activities during lockdown and quarantine.

Article by Julián A. de Diego published in El Cronista on July 7, 2020

It has been years since I’ve voiced and written about the concern that Argentina does not have unemployed or excluded people, but only beneficiaries of welfare plans. In response to the Covid-19 pandemic the idea of a universal basic income has been revived within the public health emergency as a tool to deal with the paralysis of activities during lockdown and quarantine.

In his book On War Carl von Clausewitz (1780-1831) stated that “War is a mere continuation of politics by other means”. He was wrong in his forecast; he said that the armed conflict would evolve into a business war. He ignored the invisible enemy of a Pandemic, such as COVID-19, and the required army to fight against the virus, including doctors, nurses, healthcare assistants and health professionals; the weapon manufacturers are now the pharmaceutical research labs, and the strategic weapons are curative care and vaccines.

Universal Basic Income, also called basic income guarantee, basic living stipend, guaranteed annual income, citizen’s income, is a non-contributory social security benefit paid by the Treasury or similar institutions, and financed from the State general revenue fund and other resources. In Argentina it is funded by printing money and increasing the fiscal deficit systematically.

In Argentina the Universal Basic Income had its first rudimentary version under Raúl Alfonsín with the delivery of Cajas PAN (National Food Program). Then it continued under Carlos Menem, who signed it into law, Act No. 25724/2000. It remained unchanged under Fernando de la Rúa. And under Néstor Kirchner and Cristina Kirchner it grew and grew, and other different welfare plans were added. It also expanded and got reinforced under Mauricio Macri through former Social Development Minister Carolina Stanley.

They are all responsible for using a temporary tool indiscriminately and turning it into a plague considering how it has been implemented in Argentina; it has become a political tool with which politicians speculate with the needs of the poor and indigent. Its main goal has been distorted: it is no longer a bridge to connect those in need with the labor market, and promote employability through training and education, with the aim of preserving work ethic and achieving personal success.

The current Administration has created the Emergency Family Income program (IFE, for its acronym in Spanish), intended for informal workers, domestic workers, low-income self-employed individuals and freelancers. It benefits native and naturalized Argentine citizens who have been living in Argentina for 2 years with no formal income. It is also paid to beneficiaries of the Child Universal Allowance, Pregnancy Allowance and Progresar Students’ Support Program. The IFE payment amounts to ARS 10,000.

Curiously enough, there are many cases of fraud; for example, many foreigners who receive welfare benefit plans in bordering provinces, such as Formosa, Jujuy or Misiones, who do not even live in Argentina but cast votes in favor of certain government officials by getting Argentine documents and proving a two-year residence fraudulently.

Should universal basic income exist? If we go over the main role of the State, i.e. protecting the common good and general wellbeing, without the slightest doubt the universal basic income should exist. Under the current circumstances where the social, political and economic crisis in Argentina got significantly worse with the Covid-19 pandemic, the IFE program and other welfare plans are essential to help the most vulnerable groups.

However, for welfare programs not to undermine work ethic, beneficiaries should participate in retraining plans, learning a trade, art or craft with job opportunities or improving their skills, in order to promote employability, i.e. the minimum conditions for companies to hire them formally.

The universal basic income comes in different forms; for instance, in the US nearly 51 million unemployment benefits have been paid, in addition to more than 50 million allowances (e.g. assistance programs for veterans, addicts, people with disabilities), and there are more than forty million undocumented workers who work but do not receive any benefit.

In those countries where the universal basic income was implemented, like Finland in 2015, the Cabinet of the Conservative Prime Minister Juha Sipilä announced the experimental launch of a pilot project in 2017 and 2018, to be assessed in 2019. With a budget of €20 million, the basic income amounted to €560 per month for 2000 unemployed people registered in 2016. However, in April 2018, the Finish Government decided to discontinue the project in 2019.

In the context of the Coronavirus pandemic 2019-2020, different countries, the World Economic Forum and even Pope Francis expressed their support for a Universal Basic Income.

Businesspeople, like Mark Zuckerberg (Facebook), Bill Gates (Microsoft) and Jeff Bezos (Amazon), find that Basic Income is useful to mitigate the effects of an inequality crisis and deal with the inevitable automation in the near future and the advance of exponential technologies within the revolution that is brought about by new business models.

The Universal Basic Income has come to stay and now it should be redirected towards a constructive transformation. First of all, it is crucial to eliminate any form of fraud and cronyism. The main aim should be to retrain and provide job opportunities to the most vulnerable groups in a new market creating employability, where new technologies and the gig economy will set the course of a truly “new reality”.

Por Julián A. de Diego
Por Julián A. de Diego

Fundador y Titular del estudio “de Diego & Asociados”. Abogado, Doctor en Ciencias Jurídicas.