I’ve long been an advocate of the idea of basic income (or universal income, negative income tax, citizen’s income, “great British cashback” or half a dozen other names for the same principle), but I’ve just realised I’ve never explained on here exactly why I support the idea, and even what it means.
For those who don’t know, the principle behind a basic income is a simple one — the government pays everyone, no matter what their circumstances, a fixed amount of money, enough to live on. This would, depending on the level, either replace or supplement many existing benefits (my own preference would be to set it at a level much higher than most advocates wish, but I think the principle possibly more important than the precise level).
It sounds ridiculous and unaffordable at first, but if that money is counted as taxable income, what you actually end up with is a system like the dole was thirty or forty years ago, with people in work subsidising those who aren’t, progressively, through their taxes, but without any conditionality, sanctioning, or the other brutalities of our current system.
The idea used to be Liberal and Liberal Democrat policy, but it was abandoned in the mid 1990s as being unachievable in the current electoral climate — but that electoral climate has changed dramatically, and people in many parties are now discussing it as a workable idea.
My own reason for supporting the idea is very simple. We currently have thirteen million adults in the UK, give or take, who are not in full-time waged work.
This is because, fundamentally, we don’t *need* those people to be in work to produce the things we need as a society. In fact, given the number of “bullshit jobs” in existence, we could probably get by with far fewer people in employment than we have now.
And that’s only going to increase as time goes on. My dad’s a taxi driver — how many taxi drivers will we need once self-driving cars are the norm? Many other occupations are being automated away — just look how few checkout operators your local supermarket has now.
And this is a GOOD THING — or it would be if we didn’t have a system that fetishised work-for-wages over everything else. We *should* be moving to a system where no-one is forced to work in a job that’s pure drudgery, and where people’s time is spent either on leisure or on work that genuinely benefits themselves or society in some way.
But the problem is that we *do* fetishise work-for-wages. And so we have those thirteen million unemployed or underemployed adults. All of them have to be supported by the state *anyway*, but with the exception of pensioners (who are something of a special case currently, as they have outsized voting power because of the demographic bubble we’re working through, but the government is only preserving their status by ensuring that no-one my age or younger will ever actually get to claim a state pension) it’s conditional. They will either have to pay that money back (if they’re students), or have to jump through increasingly degrading and humiliating hoops to prove that they’re applying for jobs, even when those jobs simply don’t exist in the numbers they would need to to employ all those people.
And at the same time, this system makes it essentially impossible for anyone to deliberately leave employment once they’re in it. If you quit your job, no matter how abusive or soul-destroying, you can’t claim those benefits.
And what this means is that there are people — possibly millions of them — working who don’t want to be working, while there are also people — possibly millions of them — not working who want to be working. But the current conditional welfare system means we’re pushing people who don’t want to work into work — taking scarce jobs away from those who *do* want to work. It’s a system that simply makes no sense.
Whereas with a basic income, the thirteen million unwaged or underwaged people would simply be those thirteen million people who least want or need to work for wages. If you could be sure of having enough to live on if you weren’t in a job, but you could *also* be sure that you would always get more by working — because you’d receive the basic income *plus* your wage — there’d still be an incentive to get a job, but no *coercion*.
And those people who weren’t in full-time waged work would not necessarily be people who weren’t working at all. Oh, some would, undoubtedly — there’d be people who spent their days just watching TV or drinking, and if that’s what they want to do with their lives, who’s to stop them?
But right now, if you want to quit your job and go to university and spend a few years studying molecular biology, say, you can’t do it easily, and most can’t do it at all. If you have a great idea for a small business you want to set up, but it’d take six months to bring in any income, you’re trapped. If you’re Van Gogh, and creating art that will enrich the lives of millions, but which won’t actually sell while you’re alive, you’re trapped.
We currently have a system where many of the thirteen million unwaged or underemployed people are unable to get jobs they want, while many of the twenty-nine million people in full-time employment are only in their jobs because we have a welfare system that pushed them into work or which won’t let them out of it.
A basic income would free people to do what is best for them, rather than what is best for their bosses. It would be a fundamental rethinking of the relationship between the individual and society — it would be society saying “we value you for your existence, and you have a right to exist” rather than “we value you for what service you can provide to the rich”. It would be a small change, but it would make a huge difference.
(Note that here I’m only talking about the principle. I’ve seen many arguments from people who know more about economics than I do, saying that basic incomes of different levels would be affordable with various different assumptions about taxation. I don’t know enough to know how well those arguments stand up, but I *do* know that we’re supporting those thirteen million people *anyway*, that it’s unlikely that the need to support at least that many people will change any time soon, and that we should therefore admit that that’s what we’re doing and put them on a more secure basis.)
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I like this.
But my question is this: even given the assumption that the same amount of work in total would need doing, so the same number of people would be unemployed under a BI scheme, wouldn’t BI be very expensive due to the need to also pay all the people who are in work? Wouldn’t it basically mean quintupling the benefits bill to pay 60 million people a living allowance instead of only 12 million?
Not if you make it taxable income, so those on higher incomes would effectively pay it back. Also, it wouldn’t be sixty million, as approximately a third of people are non-working age, so it’d be closer to forty million people. Richer pensioners would start paying tax on their benefits, which I believe they don’t at the moment. You also don’t have all the costs involved with the current bureaucracy around the system, which eats up a huge amount of the money allocated to benefits (a lot of right-wing libertarians support the basic income idea for this reason — it might actually work out cheaper).
I’ve seen arguments for ways of doing this that are revenue-neutral, but they tend to require some people to lose out more than I’d like. My own preferred way is to have it cost more than the current system (I’ve seen arguments that you could do it *extremely* comfortably with less than double the current spending levels), and to fund that by introducing a land value tax and raising Capital Gains Tax to be at a similar level to income tax.
But like I say, I don’t know enough about economics to know exactly what changes would have to be made to taxes and other spending to make it viable — just that I’ve seen enough people who *do* understand those issues saying it’s possible to believe that it could be done, and that I think the principle is hugely important.
“Not if you make it taxable income, so those on higher incomes would effectively pay it back.”
Surely they would only pay 40% of it back, maximum?
Not if you tweak the levels of the higher bands slightly.
OK, but unless you tweak the top band’s rate to 100%, you’re still going to be giving some BI to earners — even top earners. So there is indeed more money going out of the system, and that needs to be balanced by more money coming in. in short, you’re just saying “raise taxes to pay for it”. (I am totally on board with that, but it’s a bit different from BI not costing more than what we have now.)
Well, it replaces standard welfare and unemployment insurance, so there are savings to be had there! Also you get a lot less people sleeping rough, so your public bill for emergency services goes down. Hmm, and I guess your census gets more useful, so presumably your allocation of public resources gets more efficient.
The bit about unemployment insurance is probably important to keep in mind — a top earner who loses his or her job isn’t a top earner anymore, on the instant, and anyone can lose a job even if they didn’t think they would. A bit like how in the States you can be a millionaire pretty much up until the point your spouse gets cancer, and then you’re not a millionaire anymore. In the worst-case scenario, admittedly…
Anyway, I think it’s probably easier to make it revenue-neutral than not…
No. If you increase the top band by 1%, then you clawback the BI for people with an income more than a hundred times the BI.
I liked the negative income tax idea better. IN this a “poverty / baseline level” is set, with all those with incomes above that level being taxed, and all those who earn less being given money to bring their income up to the “poverty / baseline level”. This system means that everyone fills in identical forms regardless of their income or health status so their is no jealousy about “scroungers” etc. It also takes the system out of the employment figures, so ministers can combine their efforts to solve the real problems rather than fight each other simply to defend their Ministries. IN this system there should be little increase in the cost of “benefits”…..
I’ve read a bit about Basic Income (and negative income tax) and I really like it. I also think it will be a necessary transition to a post-scarcity society as more and more jobs are automated. But I have one question that haven’t seen addressed. If you have the answer, that would be great. If not, and you could point me to discussion elsewhere, that would also be appreciated.
Once you give everyone more money than they have now, how do you prevent it from being siphoned away from everyone, but especially the poorest people, by rentiers, specifically especially landlords?
The standard Liberal answer is “land value tax”. More generally, we need of course to have a more general restructuring of the whole economy away from rent-seeking of all kinds. I’m afraid my knowledge of economics isn’t enough to have a full solution for that problem, but I suspect it involves moving taxation away from income and towards wealth, especially land wealth, and a massive programme of social housing building. But yes, Basic Income is definitely only one piece of the puzzle — I think, though, that it’s one whose principle has to be accepted before we can put the other pieces in place, and I’m less sure about those.
The answer I’ve heard is just that giving everyone a basic income doesn’t change the basic market for stuff — everybody already buys stuff anyway, and people already have all kinds of different amounts of money that they make, and somewhere in all of that is what the market will bear. So if the basic income is just cash that comes in an envelope every two weeks from a particular government department, it doesn’t do anything different from cash that comes in an envelope every two weeks from any other source — except maybe it means people can walk away from shitty situations more easily.
I personally think a basic income and an LVT should be coupled together in such a way as to ensure that about 25-30% of a basic income is always what Nominal Rent is — that way landlords must pay more to charge more, and in some cases that will be worth it but in other cases it won’t.
(Perhaps a little off-topic, it also seems to me that under LVT certain currently “natural” entrepreneurial choices change — whereas today you and a couple of friends might decide to build a rental house then eventually live in it, under LVT it might make more sense to say “no, screw the rental-house thing, let’s run an actual hotel…”)
“That giving everyone a basic income doesn’t change the basic market for stuff — everybody already buys stuff anyway, and people already have all kinds of different amounts of money that they make, and somewhere in all of that is what the market will bear.”
That sounds right to me. So in short, what BI would represent is a transfer of existing wealth away from rich people to poor people.
And there, in a nutshell, is both the reason why it’s clearly a good thing, and the reason why i will never happen. I remind you that, during a period that sees the highest levels of child poverty in the UK for a generation, and that has seen homelessness in London double in a couple of years, we just had a budget that cut the living allowance for disabled people in order to fund a tax-cut for everyone who earns more than £45k per year. We are a nation committed to taking money from the poor and giving it to the rich, not the other way round.
Now if you’ll excuse me, I’m going to go off somewhere quiet and be sick.
Not everyone in this nation is committed to that. The Lib Dems aren’t. The Greens aren’t. The SNP aren’t, and nor are at least some of Labour, including its current leader and shadow chancellor. The current government won’t be in forever — and even if they are, Basic Income is actually one of the few types of wealth transfer that some right-libertarian and One Nation Tory types (think David Davis, IDS, or Zac Goldsmith) might countenance, as it isn’t the kind of “government interference” they hate. (A *lot* of the current support for Basic Income in the US comes from the technolibertarian billionaire Silicon Valley types, who see it as — as someone put it on Twitter yesterday — guillotine insurance…)
That is a reassuring thought. At the moment, of course, the Lib Dems and Greens together hold ### seats, and the parliamentary Labour Party is doing everything it can to rid itself of a leader with actual ideals. But, yes, you’re right, we mustn’t get drawn into thinking it’s inevitable that it will always be like this. And the idea that certain parts of the right could support BI for their own reasons is encouraging.
Still, it’s hard to imagine the Mail and Express ever allowing the idea to take hold. Surely as soon as it gained any currency we’d all be drowned in a perpetual torrent of HAND-OUT BRITAIN and GET RID OF THE PARASITES. Perhaps the best we can do at the moment is to move the Overton Window.
In that respect it resembles the NHS, which was fought openly by the Tories until everyone got used to it, at which point they were defeated by what an obviously good idea it was. They were thereafter reduced to praising it in public and only trying to kill it covertly.
An existing basic income system could never be the subject of headlines saying one man gets £100,000 and outraging readers who get nothing, because no-one would get £100,000 and no-one would get nothing. The impetus for outrage wouldn’t be there. A not-yet-existing BI system is another matter.
As I was saying, it might be that the amount of money redistributed might not be very different — heck, it might even go down! — but that authoritarian folk simply wouldn’t countenance doling out that cash without the punitive aspect. I bet they’d be perfectly happy to redistribute more money among the poor if it crushed spirits more than it already does! No price is too high, when it comes to buying moral superiority!
I’ve noticed that the tech libertarians, some of them, have some genuinely kooky “disruptive” ideas about basic income…turns out that you make just about anything as red in tooth and claw as you like, if you just put Top Men on the job…
Some basic spreadsheet calculations suggest that you could pay 60m people £17,500 a year for the total income tax take, plus the tax on the £17,500 (Both come to about £4.4 x 10 exp 11) so a ‘basic income’ at that level = an income tax redistribution, of course you still need to afford the other things the Government used to spend income tax on, by comparison the 2012-13 social security bill was about £2.09 x 10 exp 11.
Thanks — useful to have some idea of upper and lower bounds on the figures. I suspect we’d be looking at less than £17,500 per year, at least at first… though of course the sixty million figure assumes that every child also gets it.
It was a very rough calculation using figures I sourced online, I adjusted the tax take to the current bands though, so tweeking could alter things. If we set it so that a person gets £10,000 (perhaps not enough to live on individually, but workable for ‘households’ of 4 of whatever structure* (inc children adults would act as trustees for under 16 year-olds), OAPs could get assigned ‘live-in carers’ whose first £10,000 p.a. was covered, before fees. The minimum wage could of course be set lower [if we think it advisable], then cost for 60m people becomes £2.6 x 10 exp 11, £1.3 x 10 exp 11 comes *back* in tax. It’s still £6b more expensive than current benefits, but it would be vastly simpler to administer, far more resistant to fraud, and more humane. At that level, its about 64% of the income tax take, leaving 36% for other Government work.
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