Wednesday, 25 April 2018

Killer Arguments Against Citizen's Income, Not (13)

Chris Goulden at the Joseph Rowntree Foundation betrays his deliberate lack of understanding.

He lists the main pro's and then plucks some con's out of thin air:

A citizen’s income would require two big principles to be accepted and supported by the public, namely that:

1. Everyone should get a baseline level of state financial support, even if they choose not to do anything to try to earn money for themselves.

2. The basic marginal tax rate should be much higher than it is now, otherwise almost everybody’s net income from the state would rise, and there is no obvious way to finance this. (Some do not assume UBI must be paid for through income tax and suggest a wealth / carbon tax instead, or bigger cuts to state spending elsewhere, for example. None of these are easy options either).

Most politicians in the UK (or in England at least) are likely to regard both of the above as unacceptable to voters - a view supported by long-standing evidence on public attitudes to welfare.

3. A third objection relates to support for housing (and other) costs. For UBI to achieve its goal of removing the complexity and disincentives involved in means-testing, it would also need to replace support for housing costs. But with largely market-based rents, it would not be easy to include a simple rent element in a UBI payment without creating shortfalls for some or large surpluses for others. The same applies to means-tested childcare support. This counter-argument is strong – arguably public attitudes towards benefits and taxation could change but differing needs will not.

4. So, a central problem is that advocates of UBI either unconsciously or wilfully fail to acknowledge that the current system is designed to provide specific payments for people in specific circumstances (e.g. caring, disability, high housing costs, high childcare costs). If you sweep all of that away, you either have to level up, giving a massive boost to people without those specific needs (at huge cost), or you create a fall in income for those with them. Neither is remotely acceptable in any real world.

1. Agreed.

2. Is complete crap. The actual effective tax rate for claimants (i.e. about half the population, if you include Tax Credits) i.e. the total of PAYE deducted AND means tested benefit withdrawal is stupendously high and would fall considerably. There is no need to increase tax rates at all, and certainly not the basic rate of tax, that's basic maths.

As to "unacceptable" to voters, this is not an argument AGAINST simplifying and harmonising welfare and tax systems, it is an argument FOR educating voters. He is simply providing the brain dead with ammunition.

3. Housing related welfare can be kept running in parallel for the time being. Welfare for landowners is bad; means testing is bad, but needs must. Saying that "we have to means testing housing relating welfare, therefore we must also means-test non-housing related welfare" is just crap logic, you might as well go on to say we should means test non-cash benefits (state schools, NHS, the right to vote or use a public library etc).

He clearly knows bugger all about "means-tested childcare support". There's the superficially generous but savagely means tested Childcare element of Tax Credits (progressive) and the equal and opposite, weird and wonderful tax breaks for employer payments (regressive); as well as Free Early Education vouchers and kids who get a 'free' Kindergarten place at a state school (flat rate and non-means tested).

The actual cash amount/value that most parents get - regardless of which scheme(s) they benefit from - is pretty close to £90 per week per child, plus or minus £10. Ergo, we can get rid of all the overlapping crap and just give every parent of a pre-school age child £90 a week (a kind of age-related Citizen's Income) or a state school nursery place (and a small cash balance?) and there would be few winners or losers at either end of the income scale.

4. He then lists things which Citizen's Income proponents have always said should be left completely outside the system and continue to run in parallel. Disability payments should be transferred to the NHS budget anyway. . We dealt with housing and childcare costs above; he mentions them twice just to make his list appear longer. He clearly doesn't know about "caring" either. I assume he means "Carer's Allowance" which is just another reason for paying people a lower rate of Income Support by another name, so recipients thereof would be better off with a Citizen's Income (which would be pitched at the same £ amount as Income Support to start off with)


L fairfax said...

How would it work with open door immigration from the EU? Or are you assuming that would be stopped?

Mark Wadsworth said...

LF, it's called "citizen's" income for a reason. No need to make any assumptions about immigration. The clue is in the name.

L fairfax said...

Thanks for that, although I think it is a good idea to spell out about immigration.

Mark Wadsworth said...

LF, how long you would have to be legally resident here, or whether it wouldd be restricted to UK resident British passport holders is a separate debate, as is what to do with British ex-pats.

Lola said...

Surely 'means testing housing welfare' is in effect subsiding above market rents?

ontheotherhand said...

It's probably hard for the 800 employees of JRF to imagine as strong a career if Citizen's Income succeeded... The JRF gets headlines trotted out each year about poverty and minimum income required to participate in society which look a bit dodgy to me. You are poor if you can't.. - eat out with your children 4 times a year - buy new towels every 3 years and new mattresses every 5 - have your children in holiday clubs for 6 weeks a year - take a UK family holiday for 1 week a year - spend £1,000 a year on hobbies and £500 a year on booze. Their result is that £92 a week goes on rent and £93 per week goes on 'social and cultural participation'. Of the billions on the planet, how many would call changing your towels every 3 years poor?

Graeme said...

I see that Finland has abandoned its UBI of E560 per month. Unfortunately the commentators don't give any real details behind the reasoning but it seems to have been a decision based on cost, which seems odd since the level reported is hardly massive - about £5k per annum. Are you aware of this?

paulc156 said...

"Of the billions on the planet, how many would call changing your towels every 3 years poor?"

Yes you could always argue JRFs definition of poor isnt a good one but comparing 'poor' Brits to poor third world countries which you do by implication in your question above is also not very good. If the world's bottom billion is the gauge by which we measure poverty you render the term meaningless in a UK context.
ie: even if you have one towel between the whole family and can't afford to eat out once every year you're still better off than most Indians.

Mark Wadsworth said...

L, yes, HB is a landowner subsidy. But let's put that to one side for now.

OTOH, exactly. The anti-poverty campaigners don't want solutions or they'd be out of work.

G, Finland tried a piss poor half hearted attempt at UBI that was never going to prove anything one way or another.

PC, yeah but no but. That's not the point. The point is that JRF have taken a stance against something that would reduce 'poverty', however measured. Read their article - they make equal and opposite claims about it.

Graeme said...

It's given a lot of mileage to the doubters

Mark Wadsworth said...

G, which is why it is so annoying.

ontheotherhand said...

I don't mean to say that JRF employees would keep people poor on purpose just so that they had a job. What I mean is that they clearly think that Campaigning for 'social change' is needed. If something as simple as fixing the tax system could work, that would admit that it is not evil society that is the problem.

PC of course I agree that it is all relative, but someone on full housing and income benefits here is richer than most of the planet, not only in cash terms, but in terms of being dry, heating, washing machines, sky tv, mobile phones, prepared food etc. When I am told that 50% of the money that my employer is trying to pay me is needed to assist society, what would the UK poor say if there was a global government and the same argument was used on them? i.e. you are richer than 90% of society, so we will take half every year.

Mark Wadsworth said...


" don't mean to say that JRF employees would keep people poor on purpose just so that they had a job"

I personally would accuse a lot of 'anti poverty' campaigners of exactly that.