Tuesday, November 10, 2009

Guest Post: A citizen's income for all

Continuing my short series of pieces on economic issues, Natalie Bennett discusses the 'basic income', a mechanism to ensure that every citizen should be free from poverty as a right.

When you think about it, most European societies, de facto, very nearly have a basic income that supports their most vulnerable members. With very few exceptions, most societies will not deliberately force a person within them onto the streets, or leave them to starve. (That some people fail to navigate the obstacles to get to that point, and end up “on the streets” most people, even right wing politicians, will usually accept is regrettable.)

The expectation is, at the end of the day, that every member of the society is entitled to a basic level of subsistence, of survival, simply by being part of that society. But to get to that point, every society currently forces members relying on such support to jump through a variety of hoops to “prove” they deserve the support – “readying for work” interviews for disability benefit, prying “who owns those shoes in your wardrobe?” questions for sole parent benefit. It’s a variation of the “deserving poor” formula that was developed in Protestant Tudor England to replace traditional Catholic general largesse.

Over recent decades, however, increasing numbers of scholars and politicians have had a revolutionary thought. What if, instead of setting up all those obstacles, employing all of those bureaucrats to ask prying, indelicate questions, you simply accepted a simple right: if you are a member of this society you have a right to a basic decent level of subsistence? A basic, or citizens’, income, which everyone is paid, as a right – no means test, no prying questions, no need for shame at being a “welfare recipient”.

Instantly you’d save a fortune in administration costs, you’d avoid all those barriers of literacy, of ability to fill in forms, of preparedness to accept “welfare” (which robs millions of British pensioners of basic comforts – while the banks have been very happy to accept their welfare payments without a murmur). You’d also be ending at a stroke the poverty traps that leave many unemployed/disabled/unpaid carers worse off if they return to work when and how they can. And you’d have made a huge definitive statement of principle.

How would it work?

So how would you do it? You’d decide on a level of payment – the current level of unemployment benefit is often chosen as a logical starting point for thinking about this – and pay everyone that sum of money in regular payments spread over the year. You’d pay more to pensioners, to cover the fact they can have higher living expenses and no real way of earning significant income, and possibly less to children, the levels rising with their age. And that would be it.

People could choose, if they wished, to live on that sum, and devote themselves to that novel they always wanted to write, or to developing that community vegetable garden at the end of the road, or to caring for a sick relative. Or some – yes – would probably sit on the sofa.

Most people wouldn’t do that. People work because they want more than basic subsistence, and they work because many jobs offer satisfaction, company, the chance to get out of the house.
Some jobs, the least satisfying, most frustrating ones, probably would be harder to fill – but then if banks and utility companies had to stop using soulless mechanical call centres and go back to local offices staffed by local people you could actually talk to as individuals, then we’d all be better off. And if garbage and sewage workers’ pay had to go up, and the salaries of social workers doing the enormously difficult job of child protection, then that would surely be no bad thing. There might be some jobs worth doing for little pay – maybe the users of the community garden could kick in what they could into the pot for a garden manager.

Taxation would kick in at some point probably not far above the basic income, but there would be no poverty trap, no loss of income. If a recipient worked five hours a week, they’d get the pay for that, and they wouldn’t lose the free bus pass that today could make that financially crippling. If they got some work this week, but not next, they wouldn’t find their benefits cut and no money to put food on the table.

How much would it cost?

So what would it cost? Broadly, about half the cost of the basic income would come from existing benefits and reduced administration costs. The rest would have to be found – taxation, mostly from the rich, but you could also expect a society in which more people had some work, and paid some tax. It’s tough to do the maths of this: it tends to leave quantitative economists tearing their hair out because it is so hard to model – there are no examples of which to base assumptions of how a society would react.

But broadly, it is possible to find a coherent model to make it work financially. And beyond that, it is an illustration, perhaps a perfect illustration, of the fact that lots of changes, really important, fundamental changes, can’t really be modelled, planned; they just have to be done, because they are the right thing to do.

Recently I’ve been increasingly coming to the view that we’ve been looking at economics, and economic models, the wrong way around. Traditionally, we start with where things are now, change one thing, then try to make the rest of the sums add up. And those models really haven’t worked out very well recently…

What if we started differently? We could start with what we regard as the basic essentials that a society should provide – basic income and essential public services – say “this is what we need and must have”, then work out how to fund it. Lots of things might have to go – consultants fees, aircraft carriers, new roads, infrastructure for globalization. Some new and faintly shocking things might have to come in – higher taxes on the rich, tougher controls on banks. But then you’d have done what has to be done to deliver a society that truly met the base needs of all its citizens.


There’s no space here to fully explore the full beauties of a basic income. There’s further reading suggestions below. And this article has focused on developed societies, but the introduction of a basic income could be even more revolutionary in developing societies. If people already live on $US2, a payment of that sum could totally change their lives. On a small scale this has already been done, in Namibia , and the results have been stunning.

Further reading

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