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Switzerland Votes on "Free Lunch"

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Tags Big GovernmentTaxes and SpendingPolitical Theory

06/02/2016

In early June, the Swiss will be called upon to make a historic decision. Switzerland is the first country worldwide to put the idea of an Unconditional Basic Income to a vote and the outcome of this referendum will set a strong precedent and establish a landmark in the evolution of this debate.

The Swiss public will have to approve or reject a change in the constitution that would allow for the introduction of an Unconditional Basic Income (UBI) or a preset, monthly minimum income to be paid out by the government to every adult and child in the country if their income falls below a specific threshold. Even though details of this proposal have been few and far between, the most commonly cited amount of this guaranteed income would be 2,500 Swiss Francs for adults and 625 francs for children. The architects of the proposal stress that this government-guaranteed payment, unlike the current benefit programs, will be entire “no questions asked”, i.e., it will not be means-tested and will apply to every person legally living in Switzerland.

Currently, these are all the details that the Swiss have at their disposal to make their decision. No plan has so far been put forward to specify how such a proposal would be financed, whether an increase in income tax or VAT will have to be enforced, which specific existing welfare programs it would replace or how the glaringly obvious exploitation possibilities of such a plan would be avoided, without any kind of means test — or without “asking any questions”, according to one of the campaign’s catchphrases.

The main argument of the supporters of this initiative is that it would support the people that will, or already do, lose their jobs to automation and technological progress; a defensive move against “the rise of the robots” as they put it. They also claim that such a measure will give people the opportunity to grow, to learn and to pursue skills or professional goals that are now rendered prohibitive by their current meaningless and mundane jobs, that they are forced into in order to simply pay their bills. “What would you do if your income were taken care of?” asked the pro-UBI campaign in Geneva, with a poster that officially made it into the Guinness Book of Records as the world’s largest.

The Free Lunch — A Fantasy as Old as Methuselah

The promise of a free lunch is by no means a new thing in politics. Getting “something for nothing” is an age-old shiny trinket that has been dangled before the eyes of the public since time immemorial. In fact, it has appeared so excruciatingly often in our political history, for centuries on end, that one would think that it wouldn’t work anymore; not in 2016, surely. And yet it does. UBI is the proof that there are still people who choose to believe that “no strings attached” freebies and gifts are promises one can rely on and build an economy on, especially when they are coming from their government and rulers.

However, there are always some strings attached to such gifts and if history has taught us anything on this matter, it is the distinction between a gift and a bribe. Unsavory political ideologies and catastrophic cultural philosophies often tend to make their debut in front of the public hidden inside a Trojan gift horse. Unrealistic yet enchanting promises have always been a reliable political tool and it has never been a big strategic challenge to corrupt the people by granting the majority something that was stolen from minorities.

We can easily spot the parallel in the promotion of Basic Income: Even though the architects of UBI in Switzerland, quite wisely, omit any reference to the realistic and structural aspects of their scheme, at the end of the day, someone will have to pay for it. “Tax the 1%!”, argue their international fellow travelers, which, rather predictably, makes UBI even more attractive to a large portion of the public. This whole discussion about UBI reminds us of the following quote by Thomas Jefferson:

A government big enough to give you everything you want, is a government big enough to take away everything that you have.

The Cultural Argument for Collectivism

Key figures of the pro-UBI camp take pride in claiming that the main motivation behind the campaign is not economic but cultural. They say this proposal aims to make people think about the nature of life and work, it is a way to liberate them from the jobs they don’t like but need, a status which the scheme’s advocates, quite unhistorically, equate to the indignity of slavery. On top of this, they claim, UBI will help society survive the imminent unemployment apocalypse: they believe that with the help of automation and artificial intelligence 50% of all the existing jobs will be taken over within the coming decade by computers and machines.

Such an argument might sound superficially rational, but it goes deeper than that: It presupposes that we as human beings see ourselves downgraded and equated to a machine, like just another cog that can be replaced at any time, in a system where man is literally defined as a human resource.

The truth is that it is indeed a cultural debate, far more than it is an economic one. The only conceivable aim of such a factually unhinged and unfounded proposal can be to gauge the mindset of the Swiss people in this moment in time. The outcome of this referendum can provide a valuable insight into the Swiss mentality, and whether the Swiss actually prefer collectivism over individualism. Such a signal could serve as a cue for a further escalation of government empowerment: After all, the collapsing centralized system is bound to show symptoms of desperation by “doubling down” and accelerating and maximizing its centralization efforts. Thus focusing on the symptoms and secondary effects is futile; a real difference can only be made by addressing the root cause, the system itself.

Despite the economic non-sequiturs and the plain Utopianism that lie at the core of the idea of a Universal Basic Income, the concept seems to be gaining popularity worldwide. Canada is set to conduct an experiment with this idea later this year. The city of Utrecht in the Netherlands is launching a pilot program, Finland is planning a two-year trial and a British proposal is gathering interest while the nonprofit group Give Directly will start providing a guaranteed income to 6,000 Kenyans this month in a decade-long scheduled program and track the results. The idea seems to be gaining traction due to the Western Left’s efforts, however, the polls in Switzerland are painting a dramatically different picture: the UBI initiative is projected to suffer a crushing defeat.

A Bastion of Liberty

The Swiss have been voting counter-intuitively for years: When they held a referendum for or against six weeks of vacation, or when they were called upon to vote for an initiative advocating fewer working hours, or even when they made their choice on the issue of the minimum wage, they always delivered outcomes that seemed surprising to the rest of the West, especially the rest of Europe. Up to now, the Swiss have consistently rejected interference by the state when it came to such topics and have refused to grant more powers to their government. Even in recent years, when the trend in favor of aggressive state expansionism seems to be stronger than ever, Switzerland appears to still hold the line as the last bastion of liberty that remains standing.

So what is so different about the Swiss then? Switzerland is indeed very different, because it became a nation by its peoples’ own will, based on limited government, strong private property rights and a direct democracy founded on the principles of subsidiarity. This has always required open dialogue and being exposed to different ideas and values: Vigorous debate itself leads to an enlightened society. Thus, the essential difference lies in the nation’s culture, mentality and philosophy.

The Swiss have grown up in an environment in which the people were always able to decide for themselves, but they also have a long tradition of doubt and of dissent. Every critical issue is discussed and decided by the people, the actions of government are subject to the judgment of and limited by the citizenry. All viewpoints are heard, even anti-establishment voices have their say, and critical thinking provides the basis for society’s future. However, this is only possible when people rely on their own mind to think about the issues individually and independently.

Switzerland is therefore quite a hostile terrain for those who wish to promote “free lunches” and “no strings attached” gifts. A long history of independent thinking, of consequential analysis and of government limitation, makes it very easy for the Swiss to see past the populism-fueled empty promises and the associated publicity stunts. The upcoming rejection of the UBI proposal on June the 5th will and should serve as a reminder that the Swiss still remain the exception to the rule.

Claudio Grass is a Mises Ambassador and an independent precious metals advisor based out of Switzerland. His Austrian approach helps his clients find tailor-made solutions to store their physical precious metals under Swiss law. ClaudioGrass.ch

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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