There are some great political ideas that seem to circle endlessly as nothing more than ideas. Campaigns crop up and fade away, the ideas are rediscovered and a new movement starts. Sometimes they can tick along for decades waiting for the stars to align for them. The financial transaction tax is one such idea, finally getting its moment as European countries press ahead with their plans.
The land value tax is another revolutionary idea waiting to be picked up, a fundamentally sound idea that has got within a whisker of implementation in the past, but has been defeated by land-owning interests. The Georgists will get their moment eventually, and I was interested to see that George Monbiot has recently championed the land value tax.
He’s also been writing about the basic income, which may be about to move back into the limelight. This year a new campaign started to encourage the EU to look at a universal basic income, or citizen’s income. It’s something I’ve written about in the past, so I won’t into all the detail. In a nutshell, the basic income is an unconditional minimum income paid to every adult. It replaces benefits, ending poverty and guaranteeing everyone an economic safety net. Unpaid work such as child care is currently invisible in our economy, despite being absolutely vital, and a basic income would reward that.
The most common objection is that it would encourage people not to work, but it wouldn’t. A citizen’s income would only be the barest minimum. You’d be able to get by on it if you lost your job, but you’d have to make a lot of sacrifices to survive on it long term and it wouldn’t be an attractive option. It would actually eliminate the whole stupid strivers/skivers dichotomy that our politicians are so keen to encourage at the moment. Everyone gets a share in our communal wealth, unconditionally. Nobody is able to game the system and freeride on everyone else’s work, so those that work don’t need resent paying into the system.
How do you pay for such a thing? Well, for starters you’ve eliminated the majority of benefits and their administrative costs. That’s not enough on its own, but it gives you a good start. New money can be raised through carbon and other Pigovian taxes, and the aforementioned financial transaction tax. I don’t think it makes a whole lot of sense without a land tax to be honest, which once redistributed, really would be a share in our communal wealth. (A land value tax ideally replaces income tax – which is a fundamentally bad idea)
If you’re interested in seeing the idea of a basic income developed further, hop over and support the European Citizen’s Intiaitive for a Universal Basic Income. It needs a million signatures by January 2014 to move forward, and you’ll be in the first 25,ooo. Here’s their video. (Don’t ask me why it’s narrated with an American accent)
The Earthbound Report 
“Don’t ask me why it’s narrated with an American accent”
I’ll answer though: because it was made by a group of french people with a zero bound budget, and with very few people from UK committed to the project 😉
We would be happy if you find us a good british narrator 🙂
Thank you for the article!
Aha, I thought there’d be reason. I didn’t notice it until he said ‘we as European citizens’!
My wife works in radio and has a nice radio voice, maybe she could narrate something for you if you need a British accent at some point.
Would be great! get in touch with us at info at basicincome2013 😉
cheers!
If you want to discourage skivers, basic income is essential (the other option is to let people die on the streets). An unconditional, non-means-tested benefit is the only way to ensure that everyone is better off working than doing nothing.
EU studies of the Financial Transaction tax suggest it will raise little to no net tax revenue and could reduce it. The worst effect would be on the UK where it would have a definite reduction in the total tax take. Secondly I thought the FTT was to fund development in Africa. We can’t spend that money twice.
This also shows the risk with Pigovian taxes. They should be to include the unpriced externalities of something with the revenue ideally used to compensate for those externalities. If they are seen as general revenue raising then Public Choice theory suggests they will get raised beyond the levels required to cover the externalities and therefore be economically distorting.
Tax is taxing
Yes, it certainly is.
There are 101 different ways of organising a FTT. We know some examples of getting it wrong, and other ones like Britain’s stamp duty that seem to work fine. I don’t have a great deal of confidence in the EU’s right now, unfortunately.
As for Britain, we’re in danger of cutting off our nose to spite our face at the moment. We’ve opposed it in principle, but will have to pay it anyway. It looks like we’re going to end up with the worst of both worlds, having to pay it but not getting any share of the revenue. Well played Mr Osborne.
And yes, a lot of the big campaigns for an FTT have been looking for a global tax that would raise money for development. It’s notable that there has been little traction on the idea until this age of deficit panic.
I’m with you on Pigovian taxation in an ideal world, but it depends on whether you intend to just make things neutral or effect change. On carbon for example, by taxing carbon you’re aiming to have a distorting effect – you want to price up carbon in order to curb emissions. The key is to recognise when its work is done and scale the taxes back. History suggests governments aren’t very good at that. Income taxes, after all, we’re supposed to be a short term special measure.
This is why I think the basic income is best paired with land value taxation and with a dramatic cut-back of income taxes – just putting the whole programme of taxation on a radically different footing.
Reblogged this on therbert6666's Blog.
Not sure this idea wouldn’t create some perverse incentives. Getting an extra £10k for every child you have would encourage large families. Mick Phillpot had extra children for £13 per week.
I think I’d have a few more kids myself if I could get £10k a year for them… which is why the citizen’s income is only paid to adults.
No, what this group is supporting is an income paid to everyone, including children.
I quote from their website “Universal: In principle every person, irrespective of age, descent, place of residence, profession etc. will be entitled to receive this allocation. Thus we claim a European-wide, guaranteed, unconditional Basic Income.
Individual: Every woman, every man, every child has the right to a Basic Income on an individual basis, and definitely not on a couple or household basis.”
Did you read what you were signing up to before you signed?
yes basic income should also be given to children (at least partly) not only because this is fair, but also just because it would also enable to simplify the welfare system (the basic income would then replace all sort of already existing family grants and tax credit given to families)
But all basic income promoters don’t agree on the details. Some say we should give only a half of the basic income to children and consign it to the parents, some other claim it should be saved in a specific saving account given to the citizen once he becomes adult, thus enabling everyone to finance education or pay the first rents.
There are many possibilities and the initiative doesn’t claim for any specific one. But the principle of giving it to children is important in the vision of basic income being a human right, not just a social/economic policy.
And child is also a human being isn’t he?
I signed the petition because it’s only actual demand is for pilot studies and a discussion of the various models. There are quite a few things in the detail of the site that I’d want to question.
For children, no – you don’t pay them an ‘income’ in the traditional sense, nor to the parents.
That doesn’t mean they get nothing. The nearest thing we have to a citizen’s income is, after all, child benefit. As Stan says, there are plenty of ways to include children without creating perverse incentives.
I don’t think you can persuade me that having a free income is a ‘human right’. Even if you did children don’t have full human rights. They don’t have autonomy, for example parents or guardians can routinely force them to have medical attention against their wishes.
I feel that this idea, while it has some elegant points is dangerously unworkable. To give everyone in the UK £10k per year would be £620 billion. That is roughly the total current government expenditure on everything. Even if we saved the whole pensions/social security budget that would still need £420 billion extra expenditure each and every year. Obviously we can’t borrow that so taxes would have to be raised massively (70% higher). That would require a massive expansion of the government and distorting negative effects on the economy. Most of that money would come from the citizens incomes paid to those above the tax threshold so it would just be in and out with a big cut wasted on tax inspectors.
If this were a ‘human right’ then it would have to be paid come rain or shine. Given the weak public finances across most of Europe does default trump ‘rights’? Do you think that lenders would sit still while there was a massive expansion of the state’s commitments? This is simply self indulgent at this time.
The language of rights is one of the questions I had with the site. An ‘income’ is not a naturally occurring phenomenon. If you’re a subsistence farmer, as many of our ancestors would have been, were your rights violated? By whom? So it’s complicated. What we can say is that work should be rewarded, and that’s why I support the idea of rewarding care. If you chose not to care for your children or your elderly relatives, the state would do it and society would pay, after all.
Don’t get hung up on the amounts – most formulations of this idea are nowhere near £10k. Alaska, the only programme of basic income in the Western world, paid out $883 last year. The last detailed proposal I read was for £45 a week, less than £2,500 a year. That was an older paper and you’d want more than that now, but think jobseekers allowance rates (currently £56 a week) or slightly higher. Yes, that is another point of divergence between my views and the current campaign, but as I say, I’ve supported a petition to get it discussed, nothing more.
Don’t mistake this for a luxury either. The main contexts where this is being piloted right now are in the developing world – South Africa, Namibia, and India are all seriously considering it, and so is Brazil. It’s about a guaranteeing a minimum, and by making it universal you actually reduce bureaucracy and government expense. It’s basically a wholesale alternative to the welfare state.
I was replying more to Stan Jourdan who seems to be connected with this particular campaign. Since you are not supporting the crazier elements of this it is up to him to defend it.
Fair enough, but you also asked why I supported it.