Is the introduction of a UBI in Italy realistic?

Written by Sara Chemello

 

A Universal Basic Income has recently resurfaced in discussions among politicians, economists and policy makers as a possible proposal to solve inequalities and end poverty. Using the MacMillan Dictionary definition of a universal basic income, which defines it as ‘an income that is provided by the government for all citizens or residents, without any obligation to work or look for work.’ (https://www.macmillandictionary.com/dictionary/british/universal-basic-income), I will discuss the legal, economic, psychological and political effects that the introduction of this policy would have in Italy. I will focus on its advantages and disadvantages and will conclude that the latter outweigh the former.

In theory, the introduction of an UBI in Italy aims to, firstly, combat the political tension deriving from growing inequalities between north and south; secondly, to provide a minimum standard of living in a stagnant economy; and lastly, to create a more effective way of redistributing money compared to existing social protection programs, which according to Eurostat in 2016 cost Italy 29.4% of its GDP (https://ec.europa.eu/eurostat/statistics-explained/index.php/Social_protection_statistics). Another issue it would address is poverty, which still affects a large part of the population; in 2018 ‘over 1.8 million households in absolute poverty (with an incidence of 7.0%) were estimated, for a total of 5 million individuals (incidence of 8.4%)’ (https://www.istat.it/en/archivio/232062).

In practice, however, there are other issues which are to be considered. For example, poverty in Italy is not only caused by the stagnation of the economy, which is ‘ranked as one of the least competitive in Western Europe and by far the lowest-scoring in the G7’ (https://www.thelocal.it/20170928/bureacracy-tax-italy-least-competitive-g7-world-economic-forum) but also by of the presence of organized crime, especially in the southern regions. This is shown in ‘Pinotti’s research, published in the August 2015 issue of the Economic Journal, which holds organized crime responsible for a 20% fall in GDP, between the mid-1970s and mid-2000s.’ (https://www.theguardian.com/world/2015/aug/16/mafia-linked-to-increased-poverty). This suggests that an UBI might not tackle poverty at its roots, but only superficially.

Although a UBI would bring psychological and legal improvements, when looked at from an economic and political standpoint, the policy is not sustainable. Regarding psychology, a UBI would have a very positive impact on the country’s general physical and mental health as shown from data released by a two yearlong UBI experiment carried out in Finland. (http://julkaisut.valtioneuvosto.fi/bitstream/handle/10024/161361/Report_The%20Basic%20Income%20Experiment%2020172018%20in%20Finland.pdf). Moreover other ‘evidence from previous Basic Income-oriented experiments indicates the potential for UBI to increase all five psychological indicators of a healthy society: agency, security, connection, meaning and trust’ as well as ‘reduced stigmatization of those on low incomes; and positive impact on the social standing of women’ (Psychologists for Social Change, (2017). Universal Basic Income: A Psychological Impact Assessment. PAA: London). Another positive legal outcome, is that crime rates would decrease as suggested by data from Alaska’s Dividend. (https://promarket.org/basic-income-ubi-reduce-crime%E2%80%A8/). This could consequently also positively influence the issue of overcrowded prisons, a great social problem in Italy, where in 2013 there were ‘131, 1 inmates for 100 available places’ (https://www.istat.it/it/archivio/153369).

 However, apart from the two positive aspects discussed above, a UBI does not sufficiently address the country’s most pressing issues: organized crime, populism and economic recession. In fact, although it is very likely there will be a reduction in crime rates, a UBI will not tackle organized crime at its core, and could actually worsen it, by giving citizens more incentives to keep working without paying taxes. Secondly, from a political standpoint this policy is dangerous in a country such as Italy, where dissatisfaction and distrust in institutions have seen a stable presence of populist parties in politics. According to Elena Dal Zotto, ‘the populist phenomenon is deeply rooted in the history of the country and the current versions of populism, represented by the Lega Nord of Matteo Salvini and the Five Star Movement (M5S) of Beppe Grillo, jointly account for roughly 40% of the electorate.’ (https://www.cidob.org/en/articulos/cidob_report/n1_1/populism_in_italy_the_case_of_the_five_star_movement). A UBI would be easily manipulated by populists, who could gain more votes by raising the minimum base sum. Thirdly from an economic perspective, providing an effective base sum, which would ‘allow people to refuse work and look for something better’ is too expensive because it ‘would cost somewhere between 5% to 35% of the country’s GDP’ (https://www.wired.com/story/the-paradox-of-universal-basic-income/). This is an unsustainable cost for Italy, which is listed ‘third on the list of the highest government debt’ (https://data.oecd.org/gga/general-government-debt.htm). The only way to afford an effective UBI, would require cutting all other social programs. On one hand, this would help with bureaucracy however, on the other   it could not only lead to mass privatization, but also to more inequality. In fact, Kearney and Mogstad’s research papers suggest that ‘on inequality and redistribution, a UBI is by design not ideal for redistributive purposes’, highlighting that ‘the safety net should not just be about redistribution, but also about investment in human capital and in the next generation.’ .

In conclusion, a UBI is a progressive idea in theory, however it is not realistic. For this reason, I agree with researcher Luke Martinelli’s statement: “an affordable UBI is inadequate, and an adequate UBI is unaffordable”. As an alternative, Italy should focus on ‘a pro-work agenda and targeted redistribution’ to address inequality, poverty and unemployment.

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