Sunday, 10 February 2019

Killer Arguments Against Citizen's Income, Not (20)

The Killer Argument is that if you replace means-tested and conditional welfare payments with an unconditional and non-means tested one, "people won't bother working".

That is clearly nonsense, assuming it is set at a sensible level - about £75 (with housing benefit and council tax reductions on top) a week, or something like £120+ a week if housing subsidies are scrapped. There are very few people happy to live off £6,000 a year, most people want and earn much more than that.

The conditionality (aka pointless persecution to keep the Daily Mailexpressgraph readers onside), might, in marginal cases push people into work. The means testing does precisely the opposite - there's not much point working for a low wage if you lose 75p for every gross £1 you are paid. And we know that the UK welfare system is so clunky and horrible that people on benefits are discouraged from taking a short term or insecure job because it's so difficult going back on benefits again when it ends.

The nay-sayers have of course had a field day with the results of a small-scale experiment in Finland:

Beginning in 2017, some 2,000 recipients of unemployment benefits were given a monthly stipend of €560, tax-free and without any conditions, as part of an experiment in simplifying welfare and lowering unemployment.

A preliminary report published on Friday by the Finnish welfare administration Kela shows that the experiment’s effect on unemployment or self-employment was almost nonexistent.


Which the BBC gleefully reports thusly: Giving jobless people in Finland a basic income for two years did not lead them to find work, researchers said.

Well, so what?

The real lesson here is that recipients were not discouraged from looking for work, which rebuts the actual Killer Argument.

So even if that is not an argument in favour of a Citizen's Income, it's certainly not an argument against it and the other findings certainly are in favour:

However [?], the recipients of the stipend reported feeling happier and less stressed than the control group, made up of those who received traditional unemployment and welfare benefits.

Which is a clear win, less expensive bureaucracy and faff and people are happier.

That 'happiness' would be much greater if everybody got it, rich, poor or middling alike. I'm not aware that rich people begrudge other people's free at point of use state education or NHS treatment, because most rich people use the NHS and send their kids to state schools, and even if they don't, they know they could. So it all adds to that vague but important concept, 'social cohesion'.

13 comments:

Sobers said...

All you're suggesting is paying everyone job seekers allowance, regardless of whether they have a job or not. Very few people live on just JSA, they'll get all sorts of other benefits on top, or instead of JSA. For example there's far more people on disability benefits than JSA (about 500k on JSA, over 3m on some form of disability payments). So if a person who is currently claiming X in disability payments (and not working) is going to get another 75/wk in CBI thats hardly going to encourage them to get a job is it? Or exactly save the taxpayer any money.

One of two things happens when you try to replace a complicated means tested welfare system with a CBI - either its set at a one size fits all rate that either means loads of people lose out over the means tested system (which just doesn't fly politically) or its set at a rate that means no one loses out, in which case its going to be so generous no one will want to work, and be utterly unaffordable. And if its not set at a flat rate for everyone, and all sorts of other benefits are claimed on top of the CBI, then its not really a CBI at all, its just a massive rise in welfare payments at the expense of those already earning and paying taxes.

Mark Wadsworth said...

S, you are not very good at facts, maths, logic, doing some basic reading or knowledge of human nature, so I'll politelt ignore your comment.

Bayard said...

"or its set at a rate that means no one loses out, in which case its going to be so generous no one will want to work"

If this is the case, why does/did Lord Rothschild, who earns/earned a million every few days whether he worked or not, still put in a full working week? Why do landlords in receipt of far more than the "generous" CBI you stipulate above, still work?

Quite apart from that, the clue to why people get disability benefit is in the name, because they are unable to work, so they are not going to work even if they are paid nothing, they are just going to starve to death. So no, of course adding a CBI to their disability benefit isn't going to encourage them to get a job, duh.

"its just a massive rise in welfare payments at the expense of those already earning and paying taxes"

Er, no, because the people benefiting would be those "already earning and paying taxes". People already on benefits wouldn't be getting any more than they do now. The people who would be getting more would be those who are working, although, if income tax rates were adjusted to suit, even these people wouldn't get much extra.

Do try posting after the red mist has cleared, not before.

Bayard said...

"A preliminary report published on Friday by the Finnish welfare administration Kela shows that the experiment’s effect on unemployment or self-employment was almost nonexistent."

Perhaps the Finns are very law-abiding. If this was tried here, one would expect that all those on the dole and working illegally would suddenly "find employment". Mind you, we have no idea of the criteria for choosing the lucky 2000, nor what result the proponents of the experiment were hoping for and how that affected the choice of experimentees.

Bayard said...

"And we know that the UK welfare system is so clunky and horrible that people on benefits are discouraged from taking a short term or insecure job because it's so difficult going back on benefits again when it ends."

So if the Finnish system is anything like ours and the experimentees knew that the experiment was only going to last for a limited time, they would be actively discouraged from finding employment during that limited time, because they'd know they'd be buggered for getting back on the dole when the experiment ended.

Mark Wadsworth said...

B, thanks for explaining it yet again.

Agreed, if it's time limited, then people might not look for work in the last few months before it is due to expire.

Sobers said...

" because the people benefiting would be those "already earning and paying taxes"."

So who the f*ck is paying for it then? If all the people currently on benefits will be exactly the same position (no better no worse), and all the people earning money and paying taxes will all be better off, how exactly is it going to afforded? SOMEONE has got to pay for it.

Mark Wadsworth said...

For the benefit of anybody who is genuinely interested, i.e. not Sobers, a low-ish Citizen's Income could be introduced at about £75 per week with minimal distributive changes or increases in tax/NIC rates.

IS/JSA/ESA claimants would not be noticeably better or worse off; people currently in work get the £75/week but would lose personal allowance and NIC lower limit, so would also not be noticeably better or worse off.

The point is to cut down the admin and faff and overlaps involved in tax and welfare systems. That is a clear win for society.

Sobers said...

"IS/JSA/ESA claimants would not be noticeably better or worse off; people currently in work get the £75/week but would lose personal allowance and NIC lower limit, so would also not be noticeably better or worse off."

So no-one is better or worse off, so there will be no incentives for anyone to to change their behaviour whatsoever. And the point of all this is???

And if you think the State is going to introduce all this without a) employing even more civil servants and b) it costing more than the current system does, and c) managing to create more power to control the public afterwards, then you've not been watching how governments operate since, well, forever.

Mark Wadsworth said...

S: So no-one is better or worse off, so there will be no incentives for anyone to to change their behaviour whatsoever. And the point of all this is???

You clearly are trying to start an argument but you are just making yourself look stupid. Read my comment in full, which ends:

The point is to cut down the admin and faff and overlaps involved in tax and welfare systems. That is a clear win for society.

There are lots of knock on bonuses, but you're not really interested, are you?

Or do you think form filling is a valuable human activity?

Your last paragraph is laughably stupid. I'd delete the whole comment if I were you.

Bayard said...

"And if you think the State is going to introduce all this without a) employing even more civil servants and b) it costing more than the current system does, and c) managing to create more power to control the public afterwards, then you've not been watching how governments operate since, well, forever."

Sobers, that is the killer argument for not doing anything, ever. Oh, look, this can be done badly, so let's not do it.

Ben Jamin' said...

Taxes on output are a type of "means testing" (ability to pay). So less "means tested" benefits just results in more "means tested" taxes.

Which is why the CI needs a LVT as the latter is not a "means tested" tax.

Regarding work incentives, why not tax people for not working if people think this makes us happier?

Only it wouldn't. Wealth and welfare are maximised when people get paid what they are owed. That's what a CI (or any State spending) paid out from a LVT or other externality fees does.

Mark Wadsworth said...

BI, yes, income tax is a kind of means testing. But it is considerably less intrusive and expensive to administer normal income tax.