Thursday, 6 April 2017

Killer Arguments Against Citizen's Income, Not (9)

Emailed in by Shiney, John Kay trots out the usual half-hearted waffle. On the facts, he is not too far off the mark most of the time, but a lot of it is unfounded conjecture. The response to most of his KCN's must surely be: "So what?"

A few highlights:

A third, more mundane, argument for basic income observes that social welfare systems across the world have become extremely complex. Proponents of basic income argue that the scheme can achieve the objectives of welfare systems more effectively and at much reduced administrative cost.

Correct, which is what got me interested in the idea in the first place.

Putting Housing Benefit and disability benefits to one side, we have so many overlapping benefits and tax breaks, that by and large it all cancels out. Being fiscally neutral and without changing tax rates, you can replicate the end result (after welfare payments and tax deductions) within +/- £10 a week for 90% of UK citizens by giving everybody a single, flat-rate welfare payment (equal to current income support rate) and getting rid of the tax-free personal allowance and lower NIC threshold.

Call that mundane if you will, it would make the world a better place. Perhaps only a bit better, perhaps a lot better, but better.

Figures for basic income come from a variety of sources. The French figure is the minimum stipend of €750 per month proposed by Hamon, and the Swiss figure is that which was put forward for the 2016 referendum.

That bit about Switzerland is bollocks, the referendum mentioned no specific figure at all. The opponents managed to persuade people that it would be a stupid large figure like CHF 2,500 a month, not even I would have voted for that.

The lowest figures for basic income cited in Table 1 are those from the UK [i.e. about £74 a week] and Finland. This is no accident because, in contrast to the other proposals, the British and Finnish figures are not plucked from the air. The UK figure is based on the Green Party’s 2015 election manifesto, which is derived from a conscientiously conducted cost appraisal by the Citizen’s Income Trust. [Thanks, I sweated blood doing those] The Finnish figure is that used in that country’s current experiment...

In both countries, the level of basic income is below 20% of median full-time earnings.

So what? Income support is 20% of median full-time earnings at present. I'd rather have a flat £74/week citizen's income, no questions asked, than be subjected to all the form-filling, means-testing, interviews, clawbacks, penalties if I find work, and penalties if I don't system.

While the details of such calculations would vary from country to country, the essentials remain the same, and the conclusions inescapable. The provision of a universal basic income at a level which would provide a serious alternative to low-paid employment is impossibly expensive.

That is a valid argument against pie-in-the-sky Citizen's Income of £200/week, it is not an argument against a sensible £74/week. That's clearly not an "alternative" to low-paid employment, it is in addition. Like the right to vote or send your kids to a state school, those aren't alternatives to low-paid employment, they are in addition.

Housing costs are the largest component of the budget of almost all households and a particularly large proportion of the budgets of poor households.

Then keep subsidies for housing/Council Tax outside the system, that's a separate topic.

On examination, basic income cannot fulfil the aspirations of its proponents.

Yes it can. I'm a staunch proponent with a relatively modest proposal and modest aspirations which would easily be fulfilled (and real life evidence says, surpassed).

But it is hard to imagine a just system which would make no distinction between the millionaire’s spouse who routinely enjoys lunch with her friends while a nanny looks after the couple’s children and the single parent who must stay at home with her (or, occasionally, his) young and needy children, even though the other personal circumstances of the two [three?] may, in a formal sense, appear more or less identical.

Yes it is easy to imagine. If you get a few basic variables correct, all three of those people would end up with the same amount of money, give or take £10 a week (assuming freebies for single mothers are phased out over a few years instead of immediately so that they can adjust - find a job, find a partner or simply stop having kids). Is he saying that they get the wrong amounts at present? By definition, he must be.

Any method of reorganising tax and benefit systems which is even approximately revenue-neutral has winners and losers...

Correct. So what? A lot of these winner-loser comparisons are totally incorrect anyway, as critics of any sort of welfare system (current one or Citizen's Income) vastly over- or under-estimate how much people actually get now, or would get under CI, so they are comparing two wrong figures.

... if it did not, the outcome would reproduce the status quo and the reform would have little purpose.

Yes it would. Replace a thousand pages of legislation with one or two and replace a hundred thousand bureaucrats with standing g orders and more fraud investigators.

Analysis of this redistribution is strikingly absent from almost all discussion of basic income: who is it that receives too much under current arrangements and who too little?

Malcolm Torry has analysed this to death. Broadly speaking, it's a few hundred thousand unemployed single mothers who would get noticeably less (in the absence of some phasing out).

That is not to say that they get "too much", that is a moral judgement, and it is not to say that others get "too little". Daily Mail and Guardian reader can bicker over that sort of crap.

Basing the entire welfare pyramid of piffle on a few hundred thousand single unemployed mothers is like basing the entire taxation system on the narrow interests of a few hundred thousand Poor Widows In Mansions. Ah... right, that's exactly what we do.

If reform is revenue neutral, in the sense that the overall amount spent on welfare is to remain broadly unchanged (including for these purposes the foregone tax from the initial allowance and any substantially reduced lower bands of income tax as welfare payments), then the redistribution would be primarily amongst poor households.

Probably correct, but so what? It's like extending the right to vote to women, by definition, men collectively lose half their voting power. So what?

Attempting to turn basic income into a realistic proposal involves the reintroduction of elements of the benefit system which are dependent on multiple contingencies and also on income and wealth.

Nope. The only people suggesting loads of tweaks are people like him (read his article, it is a long list of unworkable tweaks with no real policy rationale behind them).

I share Piachaud’s conclusion that basic income is a distraction from sensible, feasible and necessary welfare reforms.

Propose some then, your article is full of totally daft proposals and largely unfounded carping. Whoever proposes something sensible is usually making steps towards a Citizen's Income.

As in other areas of policy, it is simply not the case that there are simple solutions to apparently difficult issues which policymakers have hitherto been too stupid or corrupt to implement.

That is exactly how it is. It is a simple - and better - solution to difficult issues and politicians and civil servants are stupid and corrupt. The Tories are currently spending more money on civil servants to harangue and harass claimants than it would have cost just to pay them their benefits. That looks pretty stupid and corrupt to me.


Lola said...

Last para. Hammer. Nail. The point of welfarism is to (a) create dependency amongst supplicants and hence (b) create lots of non-jobs for cronies of the powerful and lots of Lenin's 'useful idiots' (about 80% by my reckoning).

BTW have you submitted that as a critique?

Mark Wadsworth said...

L, ta.

I left a comment with a link to here, it has not appeared yet (was quite rude).

Bayard said...

"The point of welfarism is to (a) create dependency amongst supplicants"

Well of course; there had to be something to replace the threat of starvation through unemployment that the welfare state removed. How else do you keep the proles in order?

mombers said...

"The Tories are currently spending more money on civil servants"
Nonsense! They are spending our money on private sector companies who made cunning investments in their election campaigns (Atos, Capita, etc)

DBC Reed said...

"unemployment" has been redefined in the gig economy where employment does not exist.For sick pay, holiday pay and pensions,you have to have loan access to landed wealth (house prices) which are deliberately inflated so that when frinstance the Tories eventually sell off the NHS to the American corporates you can pay their rent seeking charges.
The Tories have already created a Citizens Income (or Citizens capital gains) based on land value uplift but it is restricted to homeowners in the lower orders.
Unfortunately not all homeowners get the same National Dividend ( as people of my vintage would call it) and feel left behind, so without proper jobs, have nothing left to lose and vote for economic Referendum suicide and bust.
I feel sorry for Jeremy Corbyn who is expected to represent organised labour when organised labour and its unions and representative systems are no longer on the political landscape.
It is too late to start worrying about private sector rent seeking if you have supported denationalisation and the marginalisation of the unions compared to their beer and sandwiches get togethers with Macmillan.
Look at the freedom smashing the unions has brought us: we buy coal from a Siberian billionaire; no security problems there!

Bayard said...

""unemployment" has been redefined in the gig economy where employment does not exist"

The "gig economy" is a modern myth. There were plenty of supposedly "self-employed" workers long before the idea of the gig economy was ever invented, back in the "good old days" of large employers and powerful unions. The the Inland Revenue started clamping down on Schedule D to force everyone to pay NI and the same people doing the same work were suddenly "employees". Now they have become "self-employed" again. Once again, I sense that left-wing fallacy that, by making the employer pay employer's NI contributions and "give" their employees sick leave, paid holiday, a pension etc, the employers are somehow, magically, going to be forced to take it out of the profits they make, when all that happens in the real world is that they end up paying their workers less. You seem to think that all the self-employed are frustrated employees, when, again, in the real world, people by and large choose to be self-employed, so that they can make their own decisions about holidays, pension etc.

"It is too late to start worrying about private sector rent seeking if you have supported denationalisation and the marginalisation of the unions"

Nationalisation has proved without doubt that it does not work. I suppose it could have been foreseen that, if you take a poor business model, the joint-stock company, and replace its owners, who care whether a profit is made or not, by the state, who doesn't, then any profits the company made would rapidly evaporate into the pockets of those who control the company, be they the management or the unions. How much benefit have the workers of the UK gained by the state owning a bunch of loss-making industries? The idea of nationalisation was that they should enjoy the benefit of the profits, not have the liability of contributing to the losses.

As to the unions, if they had stuck to representing their members in the workplace and not tried to run the country, we wouldn't be where we are today. Funny you should mention coal; this is a particular blind spot with left wingers who continually go on about the coal industry as if it was the same as the steel industry or any other manufacturing industry. There is only so much coal in the ground. When it is gone, no amount of government subsidy will make any more. The only alternative to closing an exhausted pit is to pay the miners to play cards at the pithead. Is that really something that represents a good outlay of public money? Yes I know the closure programme could have been handled better, but it was hijacked by the class warriors on both sides with the resulting inevitable disaster. The reason why we import coal from Russia is that we've burnt nearly all our own.

DBC Reed said...

Lola, a reasonable and engaging right-wing maniac, once said that he would like to hand over all pay cheques pre tax without deductions so his employees could spend all the money to get the best personal deal. The problem with this is that ,absent public health and other systems, he would have to pay people a lot more because the private sector is so expensive as it lacks the general insurance principle which levels down the contributions to the extent that for instance people with pre-existing conditions can be treated for nothing.As opposed to the American mess.
Nobody worries about a public service fire brigade turning up: back in the days of laissez faire you had to insure yourself with one of the competing companies who, in a big fire would send out competing crews, who would fight for water sources while the whole street burned down.Likewise laissez faire buses competed for passengers by reading each others' timetables and lifting them off the stops ahead of time.Far flung areas had no buses at all.
The gig economy, which you regard as the natural system, would end up with people going without vital services ( fees for good schools would be impossible) but socialism or whatever you call it, since it predated socialism, insures everybody for affordable sums.You appear to favour private sector rent seeking which we all agree on here has shown definitively that it cannot cope with the housing market, if left to itself, and in the Henry George manner (Progress measured by land prices= Poverty)ruins the economy nationally and personally.

Bayard said...

DBCR, perhaps you would like to reconsider your comment in the light of what I actually wrote, rather than the little you managed to read before the red mist came up and obscured it.

DBC Reed said...

Your comments were rather diffuse so I concentrated on your enthusiasm for the gig economy, which is not shared by many of its participants. I suggested that ordinary people have done better for several centuries having national health insurance rather than relying on employers to pay them enough to go private; same with schools.
As regards nationalisation:it is difficult when just market failures are saved by nationalisation (as happened when the Tories saved Rolls Royce from a drastic cash flow problem).Profitable enterprises that should be nationalised for safety's sake are the banks, railways and the Daily Mail that according to Newsnight saw off David Cameron as PM when he complained about its deceitful referendum coverage.
Rather than have miners playing cards when demand for coal is low (had the price been at its present level back then there would have been no strike and no recourse to the dodgy Siberian billionaire Melnichenko).The Army does not run at a profit; there is a (weakish) case for running onshore fuel suppliers at a commercial loss if it avoids such embarrassments as the Suez Crisis with its loss of oil supply for the duration.

Bayard said...


I have no particular enthusiasm for what is meant by the "gig economy". What I meant by saying it is a myth it's just another of those huge social changes that were actually there all along, it's just that no-one noticed it until someone invented a snappy term for it.

As to health and schools, I totally support these as being provided, free at the point of use by the state. The US is an "awful example of not" as my old woodwork master used to put it, when it comes to private healthcare paid for by the state. The fact that many attempts to have private enterprise providing services that the state is paying for end in public money being shovelled into private pockets is more a failure by the state to control its expenditure (but what do you expect when it is controlled by totally corrupt politicians like D.Cameron, G.Osborne and A.Blair?). So, given that, having health and education staff employed by the state is probably the best we can do, if not ideal.

Don't get me wrong, I think the NHS was one area where the Attlee government got it right. I shudder to think what it would be like now if they had created "British Health" along the lines of BR. AFAIAC, loss-making companies should be allowed to go bust. If the government things that the enterprise is socially or strategically important enough to continue under state ownership, then the enterprise should be an arm of the state, like the NHS, or the French railways. Anything else, as you point out with Rolls-Royce, is just wealthfare.

As to what should be nationalised, I would agree about the banks, but not if it meant they were just private banks owned by the state, like RBS now, only if it meant a bank staffed by civil servants. I wouldn't agree about the railways. They do not make money. The current private railway companies are only making money because they get given so much by the government. AFAICS, if the railways are a business, they should be private, although, so long as the road belong to the state, so should the land that the railways run on, but if they are a business, they should be able to run without any form of subsidy. The only justification for subsidy is that they are not a business, they are a public service, in which the whole thing should be an arm of the state, with all staff employed by the state, and not expected to make a profit. As you say, the Army doesn't run at a profit.

Finally I wasn't suggesting that the miners should pay cards when demand for coal was low, I was suggesting that they would end up playing cards when there was no more coal to dig from the ground, if there was a policy of never closing any pits. Before the Scargill strike there was at least one pit in Durham, I think it was called Bearpark, or it may have been Sacriston, where there was so little coal left that the miners had to use pneumatic breakers ("windy picks") to get the coal out, there was no room for a coal cutter, and they were taking out almost as much rock as they were coal, simply to have room to move. I even heard it said that if you took your shovel down to the coalface the wrong way up, you had to go back to the haulage road to have room to turn it over, but that must have been an exaggeration.

Mark Wadsworth said...

B, thanks for lengthy comment and I agree with nearly all of it.