Misconceptions on the Basic Income

Lisa Muggeridge thinks the Basic Income takes money from the poor and gives it to the middle classes, a misunderstanding which needs clearing up, as many others may make the same mistake.

Oddly enough, there is a grain of truth in the allegation, which is why it is dangerous. When the Green Party tried to launch the policy in the 2015 election campaign, Partrick Wintour, a Guardian columnist who appears to support the Labour Party used an apparently friendly phone conversation with Malcolm Torry of the Citizen’s Income Trust (CIT) to state that some low earners would indeed be worse off with the Green Party scheme . The only outright lie was that it was the Green Party scheme; it was the Citizens’ Income Trust scheme which was vulnerable, and then only if Tax Credits were withdrawn completely at the same time. Full details of the Green Party scheme had not been published, though it was closely modelled on the CIT scheme. Malcolm Torry published a rebuttal on the CIT website. The link would probably be out of date now, so here is the recent RSA report on the Citizens’ Basic Income principle. I gave my own less authoritative rebuttal in a blog post on 1st February 2015.

There is, in my view a weakness in the strategy taken by both the CIT and the Green Party, best described as ‘toe in the water’. Tax Credits, the Universal Credit (UC), and the Citizens’ Basic income all have the same aim: to make work pay by reducing the poverty trap caused by means testing. Tax Credits are hit and miss, but more on the UC later. The CIT and Green Party believe that the poverty trap is too huge for most people to grasp, so they would introduce a Basic income at JobSeekers Allowance (JSA) levels, in the region of £75per week. The problem with this is that it leaves housing costs untouched. There would still be a huge area of means testing. The theory is that once the public have got used to the ‘universal’ principle with JSA, they would accept an attempt to tackle the much more complex area of housing costs.

My approach, and that of some others in the Basic income movement, is more ‘big bang’. I would prefer to show  just how huge is the malign effect of means testing. My suggested initial sum for every adult would be £175pw. How I arrive at this figure is given in the comment stream on my blog post on 27th March 2016. Lisa’s misunderstanding highlights this problem. If the solution is only partial, then Patrick Wintour’s, and Lisa Muggeridge’s criticisms are right, though they overlook (in Wintour’s case, deliberately and maliciously so) that that would only be a temporary phase, during which some Tax Credits would have to remain.

Lisa started this attack on the Basic Income (on Twitter) by commenting that the Universal Credit was unacceptable. We agree on that. Regular readers will be familiar with my drawing attention  to Dynamic Benefits’, the report published in September 2009 commissioned by Iain Duncan Smith which proposed the UC. It cannot be bettered as a statement of the case for a Basic income. But that did not fit IDS’s ideology, and we Greens make no bones that a full Basic income will cost the taxpayers a lot more than the £30billion Tax Credits cost them now. The UC would cost the better off next to nothing

I see means testing as creating a poverty trap, but an equally valid description would be a Scroungers’ Charter, because benefit withdrawal has the effect of a massive tax rate on low pay. The government have successfully projected the theoretical work disincentive as an actual fact. There are just enough individuals to make the myth stick, but almost all those losing means tested benefits have worked, ever since the second world war, even though a rational decision on financial grounds would be not to work .

As long as there was work available, and no sanctions, the work disincentive could be ignored, because the vast majority want to work. Lisa and I agree that the Universal Credit would be a very mean spirited way of ‘making work pay’, even if it was a reality, which it isn’t for 95% of those who should qualify. I hope I have made clear that as long as the Basic Income was at JSA levels, tax Credits would remain. I cannot believe that Lisa defends means testing as a good idea, and we surely agree that no benefits at all is not an acceptable policy. If she still does not like the Basic income, a movement which is gaining ground world-wide, what else is there?

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2 responses to “Misconceptions on the Basic Income

    • Been away (Funewral – Tony Whittaker founder of the Green Party), so only just seen this.
      My uual main complaint – no acknowledgement of physical limits. In any case it seems unnecessarily complex. Having started with Philippe van Parijs on heterogeneity, it seems to assume some sort of uniformity, but maybe I have misunderstood.
      I certainly envisage a new world order underpinned by a global Basic income, but it would vary widely according to local situations. How for example would the $1million share scheme work in Mali? I would offer everywhere – Mali could be a test case if it wished. The deal would be a basic income sufficient to cover basic needs in Mali, BUT – I can’t make that but big enough – it would be tied to population stabilization. Help with birth control, and health are would, in addition to the BI itself, be financed from richer nations. the scheme would be conditional on population stabilization, though help towards birth control would remain. Emigration to ease population increase would have to be discouraged. Remember, no country has to accept this, it will be a package. If it gets just one taker, there may yet be hope that we are not going to trash the planet through growth. Of course I also assume the Basic income as allowing economic activity to stabilize in richer nations where the population has already stabilized.
      It frightens me how everybody else advocating the Basic income seems oblivious of the threat posed by growth, either of population in poor countries, or economic activity in rich countries.

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