Basic Income

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This stall was interested in the concept of Basic Income and the position of those that lobby for welfare reform. It featured as an adjunct to the Well-being stall.

As an economic model for a social problem Basic Income is a confounding mix of monetarism and socialism. The interest here is the idea of subsidised or waged citizenry and also the role and expectations upon the state in liberalised economies, where it seems that markets cannot be relied upon to meet the social needs (particularly needs that are challenging and/or uneconomic to quantify) and where the state acts in the interest of the populous.

It may hold relevance for groups, collectives, small organisations and other stakeholder groups as much as notions of 'state'. The core interest to the Market of Ideas is simply the possibility of welfare reform.

A basic income promises to provide the life-long economic security that helps safeguard other democratic rights. Normative reasons supporting the fundamental right to a basic income include: Increased Citizen Autonomy, Gender Equality, Political Inclusion, Social Stability & Cohesion, Economic Efficiency, Preventing Poverty - Citizenship: Rights and Duties
Common to all (involved in BIEN) is the belief that some sort of economic right based upon citizenship - rather than upon one's relationship to the production process or one's family status... - BIEN Mission Statement


Questions on Basic Income

With thanks to Dr. Malcolm Torry of Citizen's Income Trust. The CIT prefers the term Citizen's Income over 'Basic' or 'Guaranteed Income' because the UK Government has called its means-tested pensioner income a ‘Minimum Income Guarantee’


Why Citizen’s Income - what's wrong with means tested support?

  • As well as being expensive to manage the administrative complexity of means testing can act as a barrier to access for those in need.
  • Means-tested support is removed as income increases. CIT feel this is equivalent to variable rate of taxation, rising as high as 95% for some low-income households. It is referred to as 'Marginal Deduction Rate' in the Tax Benefit Model Tables (April 2007 edition) published by the Department for Work and Pensions.


What are the implicit benefits of a Citizen’s Income?

  • Confidence and freedom to experiment with employment


What kind of culture is reflected in means testing versus that of a Citizen’s Income?

  • A divided culture - one where citizens are subject to different rules.
  • The system of tax credits is administered according to the status of the individual. In contrast payments under the various benefit schemes means test the individual as part of a household.
  • Means testing places an unequal burden of proof upon applicants, many of whom are already socially disadvantaged. The Tax Credit scheme can be seen as a middle class gravy train – favouring those more able and prepared to engage with the bureaucracy to gain access to the incentives.


How would the social benefits of Citizen’s Income differ from the current system of Income Support?

  • It would create an equality of outcome – the freedom to choose a lifestyle and level of income.
  • It would offer an equal and unconditional foundation, as with Child Benefit. In existence since the 1940’s Child Benefit has managed to escape becoming a means tested allowance.


Motivation - what drives productivity if not survival?

  • Well-being, self-worth, life satisfaction…


What are the observable results of a Citizen’s Income?

  • In the UK Child Benefit provides basic unconditional support for parents and doesn’t contribute to the poverty and unemployment traps. It is a firm foundation on which families can build.
  • The Irish government has published a Citizen’s Income green paper.
  • The Dutch have discussed the idea of a Citizen’s Income, and Brazil is considering the idea.


Knock-on effect for minimum wage (would the CI be effectively subtracted?)

  • Some people can’t earn much so a minimum wage might still be an issue – it’s hard to know what would happen – it would be a legislative choice. Labour costs may be lowered for profit. Low costs may also make some jobs more viable.
  • There is a spectrum which runs from ‘No Citizen’s Income’ to ‘a liveable income’.
  • The CIT has proposed and costed a system equal to current spending which the House of Commons Work and Pensions Committee has printed as evidence in its report Benefits Simplification.
  • In the UK CIT is the only charitable trust with the sole aim of promoting debate on tax and benefits reform – there are no grants available for such activity, and other think tanks are only intermittently interested.
  • Other European campaigns tend not to focus on the economics but on the ethics and philosophy. The CIT’s grounded approach to ‘case-building’ contributes to a Europe-wide debate.


Implications of Citizen’s Income on pensioners?

  • National Insurance bears little relation to pensions
  • New Zealand has a Citizen’s Pension. The Pensions Policy Institute has done work on a UK version of this.


Could something like a Universal Citizen’s Income start a population explosion?

  • A Citizen’s Income may generate confidence and security – countries with secure pension schemes tend to have lower birth rates – elsewhere children are needed to care for parents.
  • Italy has recently introduced incentives for third and fourth children to reverse it’s low birth rate.


Universal Guaranteed Income

Some campaigns would like to see the principle applied globally. 20% of GDP is mooted as the basic amount set aside for a guaranteed income. World GDP per capita (PPP) is estimated to be $10,200. 20% amounts to $2,040 (£1037, €1,374). The list below illustrates this sum in relation to national and regional indicators.

The Rich and Poor of Europe (GDP per capita) [1]

  1. Bulgaria €2,764 (£2,051)
  2. Romania €3,662 (£2,717)
  3. Latvia €5,566 (£4,130)
  4. Poland €6,386(£4,740)
  5. EU 27 average €22,400 (£16,630)
  6. Irish Republic €39,220 (£29,110)
  7. Luxembourg €64,607 (£47,958)

At $700 Burundi has the lowest measurable GDP per capita. GNI per capita 2006



Can a basic income cure Baumol's disease? - Stefan Késenne
How a universal and unconditionally guaranteed 'Basic Income', financed by a higher tax rate on income, can help to remedy, among other things, the so-called Baumol disease concerning the production of the arts, on the one hand, as well as the problems, raised in the Linder Theorem with regard to the consumption of arts and culture, on the other hand. Using a neo-classical time allocation model, we show that a basic income system increases the output of both the formal and informal production of the arts, and promotes the consumption of arts by lowering the shadow price of time.
http://www.springerlink.com/content/x55406r614024658/
http://en.wikipedia.org/wiki/Baumol's_cost_disease
http://en.wikipedia.org/wiki/Linder_hypothesis


Basic income may operate on a macro level, expecting individuals to consider their citizen responsibilities. Well-being may be user-centred, urging the individual to focus on their basic physical and emotional needs. Fair Shares has some guidelines.

The Need for Basic Income: An Interview with Philippe Van Parijs


Feedback from the stall

  • In Italy Mussolini punished families for having 3rd and 4th children. Italy's population (along with it's economy) is currently in decline so the government has introduced financial incentives for families to have 3rd and 4th children. Child Benefit is a form of Basic or Guaranteed Income.
  • Have you heard of MOS? (a French social/welfare campaign of some sort)


References

http://en.wikipedia.org/wiki/Basic_income

Basic Income Earth Network

Citizen's Income Trust

Green Economics Institute

Basic Income Studies - http://www.bepress.com

Association for Heterodox Economics 10th Annual Conference 2008: 4 – 6 July, 2008, Anglia Ruskin University, Cambridge

http://en.wikipedia.org/wiki/Claus_Offe

http://www.jamesrobertson.com/index.htm

Vol 15 No 4 of Renewal - The Commons


To the Market of Ideas