Citizen’s income

Citizen-iconIn the Guardian today Paul Mason raised one of the most interesting economic ideas ever suggested, that of a citizen’s income.  This idea has been around for years but has recently surfaced again during the UK election campaign since the Green party in England and Wales proposes it, although apparently the citizen’s income trust opposes their version.

I’ve supported the idea of a citizen’s income in principle for years since I read about the idea, however even I concede it raises significant questions and challenges.  But first what is it?   The idea is very simple, everyone in a country is paid automatically an income, whilst not luxurious this is enough to exist on.  Almost all benefits cease to exist, although for example people who have a disability get paid more than the basic citizen’s income

So what are the pros and cons?

On the plus side.

  • Giving everyone a basic income would be great for social justice.  As this blog and the book’s FB page have documented people have been struggling with rising energy and food prices over the decade or so.  We could eliminate the need for foodbanks.
  • Giving everyone a citizens income would increase wages and incomes.  Employers would not be able to pay poor wages since it would not be worth people working for them.  The theory is that these jobs would still have to be done (for example cleaners) and so employers would have to pay them better.
  • People could afford to work lower numbers of hours, since the work would still need doing in most cases then there would be more jobs to go round.  This would have of course huge community and family benefits.  People would have time to spend with their families and do voluntary work in their communities.  Economic savings on for example divorce would follow.
  • The citizens income would encourage entrepreneurship.  Knowing you had an automatic basic income coming in would encourage people to take the risk and start their own business.
  • It saves money on bureaucrats since social security would be much simpler to administer.

On the minus side the citizens income could have the opposite effects to that envisaged above.

  • Since people had an income coming in bad employers might just use it as a subsidy- just as they use tax credits at the moment and real wages might fall.
  • The citizens income might not encourage entrepreneurship or community work, but people sitting around doing nothing.  Whilst I think some people will do this, they do so at the moment.  Most people want to work since its very boring not to.  There is an argument that says this negative argument is not true since the income is not withdrawn as you earn more money.
  • How is it to be paid for.  Both Paul Mason and the citizen’s income trust bandy around some figures.  The citizen’s income trust make their figures balance completely so the savings from social security etc. pay for the income.  However their scheme is partial (which in my view almost negates the idea).  Paul Mason suggests an income gap that might be filled in time.  All that I have read in the past suggests that income tax would have to rise.  My view is this is not necessarily a problem, but the whole idea would be a good excuse to simplify the tax system which would without less tax breaks bring in a lot more revenue.  The only problem is this simplification would take many years.
  • Higher wages would mean lower profits and hence according to Paul Mason a slower moving economy.  This is is not necessarily true as those on low incomes tend to spend their money, those on high incomes bank it.
  • The biggest problem with a citizen’s income is the last one.  That of immigration, especially EU immigration.  Something Paul Mason and the citizen’s income trust do a complete body-swerve on.  The idea is that UK citizens only get the income.  However, under EU law I’m not sure this would be legal.  We have this debate over benefits with eligibility of them being delayed.  Even I who is very relaxed about immigration (nor want to leave the EU) do not think that people should come here to get the citizen’s income.

Does this idea have merit?  I think so, like the carbon ration it has an elegance, simplicity and fairness to it that I like.  It also fits in (in my view) with peak oil economics, that of a slower moving more localised economy.  Will it ever happen?  I’m not sure but it certainly raised a lot of debate on the Guardian’s website.

Neil

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