Wednesday, 1 June 2016

It is easy to rubbish something if you wilfully misunderstand it

Spotted by ShineyMart, in article from FT:

Yet simple arithmetic shows why these schemes cannot work. Decide what proportion of average income per head would be appropriate for basic income. Thirty per cent seems mean; perhaps 50 per cent is more reasonable?

The only meaningful debate to be had is what level the basic income could be (whereby £zero is a number worth considering). Pitching it at a random target like 30% or 50% is idiotic. So a sensible start would be to set it at current unemployment benefit rates of about £80 (excl. Housing Benefit)). That is perfectly affordable, assuming it replaces most cash welfare payments and the tax/NIC-free personal allowances. Relatively few people would be noticeably better or worse off (more than £10 a week either way).

(Personally, I'd like to see it a bit higher than £80 a week, maybe £100 or £120, but that is pie in the sky for the time being).

To see the average tax rate implied, add the share of national income taken by other public sector activities — education, health, defence and transport. Either the basic income is impossibly low, or the expenditure on it is impossibly high.

No, set the rate correctly (£80 a week) and nobody's tax rate would go up - for those on means tested benefits would see their tax rates fall dramatically.

There could be no low-paid or part-time positions. Few work as refuse collector or shelf stacker for the love of the job. So such employment must pay more than the guaranteed basic income. Higher unemployment and radical redistribution of income would follow.

Yes there would, provided you can keep most of your earnings and lose none of the basic income (instead of under current rules where you lose half your earnings and all of your unemployment benefit - hence the whole sanctions regime). To be fair, he is attacking one specific proposal which recommends means testing the basic income, in which case it is not a basic income, full stop.

4 comments:

Ben Jamin' said...

The debate regarding the CI is similar to that for the LVT.

For a start there are lots of proponents who have jump on the bandwagon (usually for promoting Socialist policies) and don't know what they are talking about. Hence we get proposals of a CI/BI that are something else entirely ie they include HB, Disability Benefit and are means tested (face-palm).

This confusion allows opponents to make valid arguments about something that isn't actually an LVT or CI.

There are probably only a handful of people in the UK qualified to talk about LVT or a CI. Yet for some reason the media doesn't bother to fact check with them first.

Frustrating.

Kj said...

To be fair, he is attacking one specific proposal which recommends means testing the basic income, in which case it is not a basic income, full stop."

That would be the lunatic adoptive brother of CI sometimes called "Guaranteed Minimum Income", which should be kept away from the family as far as possible :)

The thing about CI is that although there's definetly a upper limit to it, but interestingly, except for transaction costs being unproportionally high, there is no lower limit. So even at a very low level of 20-30 pounds a week, it has an effect for lots of people. Ok, so you can't abolish other benefits at a very low level, that wouldn't be acceptable. But if you start by doing away with some tax/welfare roundabouts, and adding it into a CI, you'll allready have positive results for swathes of people. Less and less people will loose out from taking low paid work, and they will have the benefit of regular liquidity. Ofcourse it'll mostly go to rent without LVT, but still.

test said...

Hence we get proposals of a CI/BI that are something else entirely ie they include HB, Disability Benefit and are means tested (face-palm).

To be fair the seriously disabled require a bit extra and housing benefit is a minefield.

Mark Wadsworth said...

The, agreed, but those are separate topics to CBI.