The real military expenditure of the Kingdom of Spain is immense. And it is increasing. It is one political option to devote a considerable part of the general state budget to military expenditure, but it is another to devote this amount to guaranteeing the material existence of the entire population.

By Daniel Raventós

Much has been written about the normative basis of a basic income rather than about its financing. I would like to focus on a little-discussed aspect of financing. The best research on the economic feasibility of a Basic Income is based on financing through the main tax (income tax) and a wealth tax. It is worth remembering that wealth and income are two different realities: both are very unequally distributed in the world, but wealth is even more unequally distributed than income. In the case of the Kingdom of Spain, there are no particular differences with more or less similar economies. Together with Jordi Arcarons, I wrote in October 2023 that “the truly rich in the Kingdom of Spain are reduced to just under 350,000 – 0.78% of the population covered by the household panel” and that this group “concentrates an income and personal wealth of around 54,000 and 770,000 million euros – 8 and 32% of both figures in total”. These are people with personal wealth of more than 500,000 euros. To put it another way, 350,000 people in the Kingdom of Spain have legal assets (we cannot include everything that is hidden or evaded in a semi or direct fraudulent way) of more than half a million euros. The justification for a decent tax on wealth, which would help to finance the basic income in the Kingdom of Spain and the European Union, has been explained in detail in En defensa de la renta básica (Deusto, 2023). This justification goes hand in hand with the republican-socialist concept of freedom, for which freedom cannot be conceived independently of the material conditions of existence. In other words, the material existence of one person should not depend on the will of another very rich person. This, given the current institutional configuration of property rights and the legal possibility of their immense accumulation, is far from being the case.

Financing through income tax and a wealth tax (plus environmental taxes). What has not been discussed in the same detail, however, is the possible partial or total contribution that some items of the General State Budget (PGE) could also make to the financing of a Basic Income. In the financing proposals in which I participate with other economists, we usually say that “we don’t touch anything” in the PGE. The King will continue to do as he pleases, the army will continue to receive the billions it receives, the Catholic Church will continue to make a fortune, to the shame of any democrat, and so on.

Two proposals in this regard. The first concerns military expenditure. The real military expenditure of the Kingdom of Spain (and other states) is immense. And it is increasing. By real military expenditure we mean, in addition to the consolidated defence budget, everything that has to do with military expenditure, even if it is divided up or distributed among other ministries. In figures: 27,617 million euros, 75.7 million per day. More than 2% of GDP. There is no doubt that a considerable part of these astronomical sums could be used to finance a basic income. Of course, this would be the case if a different economic policy were chosen. It is one political option to devote a substantial part of the PGE to military expenditure, but it is quite another to devote it to guaranteeing the material existence of the entire population.

The second suggestion: if the state did not make any contributions to any religion, especially the Catholic Church, another not inconsiderable amount would be available. Between tax exemptions, the distribution of income tax, the consensual theft of thousands of birth certificates… the Catholic Church has many billions at its disposal. According to Europa Laica, the figure is around 12 billion. As recent decades have shown, the fewer believers and followers there are, the more money and property the Catholic Church has.

These proposals are two complementary variants of the usual funding proposals. Military expenditure and religious expenditure, or to be more precise, expenditure on the Catholic Church, which an economic policy committed to guaranteeing the material existence of all its citizens could devote to this end.

Let us move on from the public sector to the private sector.

The financial results of the banking sector for the last financial year, 2023, are already known. More than 26,000 million euros in profits if we add up the five major financial institutions. 26% more than the year before. The reasons? The increase in the European Central Bank’s interest rates, the high commissions paid to clients, and the lack of interest on deposits. The result: these immense profits and the extraction of income from the citizens who have to do business with the financial sector, i.e. the vast majority. It should be remembered that when the Spanish government introduced the timid extraordinary tax on banks, the banks predicted all kinds of catastrophes as a result of this “intervention”. The facts speak for themselves: 2023 was a year of record profits for the banks and 2024 is expected to be even better. Despite the tax. It is well known that the relationship between the major economic powers and the rich and taxes is not a pleasant one. Taxes are blamed for many ills. And the bank tax does not deserve any other fate. It is like the minimum wage: if it is raised, unemployment will rise. Then the facts say the opposite, but they repeat the same thing with every possible increase in the minimum wage, without the slightest modesty. This extraordinary tax should be ordinary, as some political parties are demanding. And at a higher rate than the current one, if they once again opt for an economic policy whose priority is to guarantee the material existence of all citizens. The president of Banco Santander has another economic policy in mind, and it is this: “The best way to raise more money is to grow more so that companies earn more and this will lead to more being collected (…). The big challenge is that we are not growing enough. The old, false and constant refrain of the rich and their technical and intellectual servants.

One last thought. When a proposal of the magnitude of a basic income attracts the sympathy of a very large number of people, its defenders are usually divided according to different criteria: the amount that should be taken as a starting point, how it should be normatively justified, the tactics to be followed with the institutions, the previous steps to be taken to see it become a reality, the form of financing, among others. It is perfectly understandable that any social proposal of a certain size has different ways of defending itself, and that this entails certain discrepancies depending on the criterion chosen, nothing extraordinary. Is this not the case for environmentalists, feminists, supporters of the self-determination of stateless nations, trade unionists, etc.? Without wishing to oversimplify, I am only interested in one criterion, which can be summarised in this question: what steps must be taken to arrive at a basic income? There are at least two significant groups here, although of course there are more than two. I’ll call them original and radical. This is just to describe, not to judge. To be an original person can be very advisable in certain situations, to be a radical person is a good position in a variety of circumstances. The former are always racking their brains about the intermediate steps they think would lead to a basic income. Let us take as a general example: improving all conditional benefits more and more until we reach a point where we only need a little push to get to the basic income. The latter, although they also think that “improving” what already exists is always comforting, see it differently. I will refer to what the authors of the aforementioned book In Defence of Basic Income wrote: “What steps had to be taken to abolish slavery? One: abolish it. What steps had to be taken to introduce the 8-hour day? What steps had to be taken to abolish the death penalty in certain countries? One: abolish it. What step did it take to ban smoking in restaurants and other places? One: ban it. The Moriginists do not accept this argument.

What I do not know if they share is something that seems elementary to me, but knowing other people’s opinions, it is not so elementary to them. And I quote from the same place: “Conditional subsidies do not lead to a basic income unless we are dealing with a government programme that establishes a legislative project. A project that specifies that in one (or two) years you will get there, in two (or three) years you will get there and in three (or four) years you will get to the basic income”.

In any case, these kinds of discrepancies will continue. And you cannot pretend that one position is sound and the other perverse. But what I don’t think we should compromise on, and I think it would be foolish to do so, is that, given the current reality, given the accumulation of social barbarities that we can observe, given the persistent poverty of a fifth of the population (to limit myself to the Kingdom of Spain), given the insulting accumulation of wealth of an insignificant part of the population, given the repeated experience of improving conditional subsidies with the poor results we know… the basic income is considered unrealistic or utopian, or costs a lot of money. These are criticisms that seem to me to have little justification. They sound to me like the criticism of the right-wing and employers when they demanded paid leave, according to which workers would not know what to do with it and would spend it on alcohol. Or the more recent one we owe to Josep Sánchez Llibre, president of the major Catalan employers’ association, Foment del Treball Nacional, who, in a statement to Catalunya Ràdio last January, declared that ‘to propose any kind of limit on the income of employers, however rich they may be, is disrespectful to the business class’. Or the traditional one that the right to strike is an attack on the freedom of enterprise. Or one of the most repeated: the cause of inflation is the rise in wages. But however unjustified they may be, we will continue to hear them often.

The original article can be found here