French Socialist Plan Has Robots Funding Money for All (Correct)


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(Bloomberg) -- Most politicians promise more jobs. France’s Socialist presidential candidate is saying there may not be many in the future, but you’ll get paid anyway.

Benoit Hamon won France’s Socialist Party primary by proposing a basic income for all, an idea that every opponent said is unrealistic and unaffordable but which appealed to Socialist voters who’ve turned their back on party leaders.

The signature issue of the 49-year-old former education minister would mean the introduction of a 750-euros ($810) a month payment to all citizens. He says it will help alleviate poverty and make up for a shortage of work as the economy progressively automates. Challenged by his opponents over its cost, he says a tax on industrial robots could help to pay for it.

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The idea of a basic income has been kicking around for a good 500 years. Renaissance thinkers discussed it and the American revolutionary Thomas Paine proposed it, but the discussions in recent years were largely confined to academic circles. Hamon wants to introduce the payments in the world’s sixth-largest economy.

“The key to Hamon’s success is that in an insurrectionist climate, he passed as the most insurrectionist candidate,” said Jim Shields, a professor of French politics at Aston University in Birmingham, England. “Hamon imposed his universal basic income as the issue of the campaign, obliging other candidates to take positions on it.”

Switzerland, Finland

In recent times, a handful of administrations have thought about the idea, but few have actually tried it out.

Finland this month is starting an experiment with 2,000 randomly chosen unemployed people receiving 560 euros a month. Canada’s Manitoba province conducted a test in the 1970s that was shut down after a change of government while Ontario plans a trial this year. Utrecht and other cities in the Netherlands considered a pilot program in 2015 before deciding against it and Swiss voters actually rejected a basic income with a 77 percent majority in a June 2016 referendum.

Civilizing Capitalism

Former Greek Finance Minister Yanis Varoufakis is one of the most vocal supporters of basic income. “It is a necessity, a major part of any effort to civilize capitalism as capitalism goes through a spasm caused by a new generation of technologies,” he told a conference in Zurich last May.

The authors of the Swiss initiators had left it up to the government to decide how large the stipend should be, but they suggested 2,500 francs ($2,500) for an adult and a quarter of that sum for a child. Those in favor of a basic income say that it encourages the jobless to take low-paid or temporary jobs because it means they don’t stand to lose benefits, which in some European countries can be almost as high as entry level salaries.

“There are good arguments in favor of replacing existing unemployment and poverty programs with one simple payment that doesn’t discourage people from looking for work,” said Zsolt Darvas, a senior fellow at Bruegel, a Brussels-based research institute. “But there’s a good reason that it’s never been adopted on a large scale. The taxes that would be required to pay for it are just not feasible.”

Read more on basic income: QuickTake

Hamon argued in the Socialist primary that basic income is needed to make up for lack of jobs in the future as the economy progressively automates. His opponents such as former prime minister Manuel Valls and former economy minister Arnaud Montebourg argued that it was too expensive, and that more job training is the answer to a changing labor market.

A study by OFCE, an economics research unit linked to Sciences Po political science institute, said the measure would cost a net 480 billion euros a year in France, after accounting for various existing welfare payments it would replace. That’s equal to 22 percent of gross domestic product, in a country where taxes already account for 45 percent of economic output. Among 35 rich countries tracked by the OECD, only Denmark has a higher tax take. A separate study by the free market-leaning Institut Montaigne estimated Hamon’s plan would cost 349 billion euros a year.

And his chances of actually implementing those ideas are slim: polls show that Hamon would finish a distant fourth or fifth and be eliminated in the first round of the presidential.

None of those doubts deterred Socialist primary voters. Hamon won the most votes in the first round of and defeated Valls 59 percent to 41 percent in the run-off on Jan. 29. In the final debate, Valls said Hamon was making “impossible and unfinanceable” promises.

For Hamon’s supporters, his Utopian vision is an asset, not a liability.

“The others were just stuck on the technical issues of how do we manage a distribution of wealth, but he has a real vision of a future where work won’t necessarily be what it is now,” Amirouche Belkessam, 49, a manager at a pharmaceutical company, said during a Hamon rally in Lille. “He’s actually the one anchored in reality, because he’s the only one trying to figure out the society of the future.”

(Corrects size of French economy in fourth paragraph.)

--With assistance from Corina Ruhe To contact the reporter on this story: Gregory Viscusi in Paris at gviscusi@bloomberg.net. To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net, Geraldine Amiel, Ben Sills

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