Tuesday, 7 June 2016

Killer Arguments against Citizen's Income, Not (1)

Bill Bonner, the man behind Moneyweek, has a go at the idea of Citizen's Income:

This is crazy!

If you can earn $30,000 a year without working, it will be hard for anyone earning less than $60,000 (about the same as $30,000 after taxes in many places) to get up in the morning and put on his overalls.

Why bother?

The waiters will abandon us at our tables, our glasses unfilled and our dirty dishes still in front of us. The valet parkers will drive off in their own new cars. The burger flippers will leave their hot patties in midair as they head home. All the low-paying jobs, and more than a few middle-income posts, too, will be vacated.

To be fair to Bill, who normally speaks sense, he is against the whole idea of a welfare state. However, what I'd like to ask him is "why do the rich work, then?" Why did Lord Rothschild, a man who earned millions a year and was already worth many millions more, work a longer week than I did, as I discovered to my amazement when I was working on his house. Even his clerk of works had enough money never to have to work again, but still put in a full week's work. It doesn't seem to have occurred to Bill, though, that if someone who earns $30,000 a year after tax can earn $30,000 a year without working, they would rather continue to work and earn $60,000 after tax than remain on $30,000 in idleness. If everyone on $30,000 a year would rather remain idle than earn more, why does anyone on that salary in the absence of a CI ever look to augment their income?

I also heard the selfsame argument being put forward on Radio 4 today, with the same whiff of classism - the rich may work when they don't have to, but the poor are different, they are all feckless, idle layabouts who wouldn't get out of bed unless they face the threat of starvation - a piece of economic and social claptrap easily disproved by the numbers of people who draw the dole and work illegally.


Mark Wadsworth said...

Excellent new series, episode one.

These fuckers start off by plucking a stupid figure out of the air like $30,000. That is a standard tactic.

Can't we be realistic and say £3,000 or £5,000 a year or something?

Rich Tee said...

Rich people usually are motivated by greed, or they are workaholics, or they are motivated by the social esteem gained from being rich and/or influential. Many people aren't like that. If it was $30,000 I dare say I would stay at home, but as MW says it would be far lower and nowhere near enough to live on. I would be surprised if it were more than £1,000 a year myself, and the government would keep finding sneaky ways to reduce its real value as the years go by.

The Stigler said...

Rich Tee,

But while the poor may not be motivated by that, they are motivated by nicer essentials - having a better house, having a car, going on holiday. I know a couple of poor people made good who worked really hard. I also know kids of well-off people who are basically unemployed. They have skills, but just don't apply themselves.

Bayard said...

RT, As John Cobden pointed out two centuries ago, the poor are the same species as the rest of us. They have the same motivations and desires. There must be plenty of people in Britain who weren't born to money but don't have to work because of the rents they receive through buy-to-let, but they still do work. Yes there are the lazy who would do nothing if they didn't have to, but they are as evenly distributed through society as any other trait. If they are poor, they are unemployed, if they are rich, they are trustafarians, but they tend to make up only a small proportion of the population. In any case, whether they were rich or poor, I would not want to have one of them working for me. Society is probably better off having them idle.

Bayard said...

Mark, to be fair to Bill, I think the $30,000 a year was the "let's discredit this idea by proposing an unworkable version" Swiss level of CI.

mombers said...

The key incentive to work when there is a CI is that if you don't, you lead a subsistence lifestyle, which is not fun. And you have to live somewhere really isolated or really grotty. The difference is that if you do work (as the vast majority clearly would), you get to keep much, much more than under current welfare where you get docked 80 or 90% of your private property if you're on low pay through tax and benefit withdrawal.

Dinero said...

Also if that were true, Bill's $60k salary man would respond to a 100% pay rise by applying to work half weeks.

Ben Jamin' said...

We could take the £250bn worth of privatised land rent to fund a CI, without any other changes.

Lets say £4K for everyone.

The benefits would be a) less inequality b) land and immovable property allocated at optimal efficiency

I'm struggling to come up with any costs.

If land rents are a perpetual free lunch, then spreading it out more evenly isn't going to incur any extra efficiency costs.

So, while McDonald's may well have to put up the price of it's food because it's wage bill will become higher, that will balanced out elsewhere in the economy.

Ralph Musgrave said...

Musgrave’s law of Universal Basic Income:

There is nothing that can be done under UBI that cannot also be done under the existing system. The only important question is thus which is the administratively cheapest way of doing what we want to do.

Mark Wadsworth said...

Rm, the current UK tax and welfare system is a ridiculously complicate UBI system, with lots of loopholes, gaps, double claimants and people who get nothing.

On average though, you could replace large parts of both with a UBI and most people would not be much better or worse off in £££ terms, they would just be free of hassle and more likely to work.

Derek said...

When it comes to the question of why people work, it all comes down to Maslov's good old Hierarchy of needs. Which, simplified, basically says that people work until their essential needs are satisfied, then work to increase their status. It doesn't take a lot of cash to meet essential needs, but it takes as much as you want to increase your status. That's why the rich work.

Of course this gives a guideline for the size of the Basic Income too, assuming that it isn't a Citizen's Dividend, funded by an LVT. It has to be big enough to cover essential needs, but not big enough to pay for the sort of quality or things that allow you to "keep up with the Joneses".

Lola said...

And you have to quantify 'rich'. Mrs L teachers pension has a capitalised value at current Gilt rates of about £600,000. Does that make her 'rich'.

Back to 'CI encourages idleness', I am not so sure. There would be huge societal pressure on individuals to do something; make a contribution. After all, it's the success of production that drives land value, AOTBE.

Bayard said...

"There would be huge societal pressure on individuals to do something; make a contribution."

I don't think their needs to be: there is this pernicious meme that the unemployed are unemployed because they are lazy and they need to be forced back to work. As has been mentioned before, the long-term unemployed, those who are not interested in finding a job, are actually a minority and it is probably better that they are paid a minimum to stay idle and not be forced into work where they would only cock things up deliberately. You don't need societal pressure when you have boredom.

Lola said...

B. Possibly. I think that we are talking about slightly different things. In that the feckless will always be the feckless. But the non-feckless will generally respond to the 'get off you arse and do something' gibe. And like you I do not seek to demonise all those on benefits. I do not agree with the 'forcing back to work' meme.
But, when the government deliberately seeks to create a client state...

Robin Smith said...

Would it not be more authentic to stick to your primary ideology - Land Value Taxation.

Welfare, is welfare, is welfare. Whichever way you try to euphemise it(Citizens Income), it's still welfare. And welfare is an inherently unjust institution, because it another form of unearned income.

And like taxation in reverse its paid whether you earned it or not. Likewise, taxation is confiscated with no guarantee 'benefits' will be received for it, nor any lack of guarantee you will get more than you paid for.

Unearned incomes, in whatever form, including Citizens Welfare are inherently unjust, so can only lead to more bad in the end - you cannot get any good form doing bad. Its against the law of science.

What Citizens Welfare does for you I suspect is gets you a vote for your ideology where pure LVT clearly never gets a vote. And I reckon you know this unconsciously but are not willing to be authentic.

This approach facilitates an effective 'compensation' or 'exemption' for rent seekers. The same kind of thing which has caused LVT to persistently be the most failing economic policy in all of history. And here we go again.

So... get rid of all the proximate ideologies and stick to your primary one with authenticity and maybe you will start to make in roads?

George Carty said...

Bayard, the "Cuckoo Economics" article explains why governments tend to hound the poor:

The need for a certain rate of unemployment obviously cannot be admitted by politicians, who must always pretend to desire full employment, and who will be judged on their success in reducing unemployment during their terms of office. Given that the central bank will maintain unemployment at the natural rate, the actual rate cannot be reduced except by reducing the natural rate. And if, due to opposition from the rentier class, the natural rate cannot be reduced by shifting the tax burden onto economic rent, the only remaining method is to make life more difficult for the unemployed, increasing the desperation of the unemployed to get jobs and of the employed to keep them, so that the same downward pressure on wages can be obtained with a smaller number of unemployed. Having a smaller number of more desperate unemployed does not reduce the overall severity of the problem, but makes the statistics look better.