The case for basic income

Two apparently unrelated recent events have something in common: they both highlight the case for a citizens’ basic income.

The first is the ruling that Uber drivers are not self-employed and so are entitled to the living wage and other employment rights.

The logic for this ruling has been expressed by Jolyon. Uber drivers, he says, must accept the terms and conditions of their employer: unlike the traditional self-employed, they cannot set their own prices. They lack market power, and so the law should protect them.

But this protection comes at a price. The higher cost of employing Uber drivers means either higher prices for Uber users, thus reducing consumer welfare, and/or less demand for such drivers thus depriving some of much-needed work.

We have therefore a dilemma. How can we protect workers who lack bargaining power whilst at the same time not stifling new businesses and flexible forms of work?

This is where the citizens’ income enters. In giving people an outside income, it empowers them to reject bad jobs. But it also gives them the flexibility to work a few hours as they please. We thus get the best of the gig economy – proper entrepreneurship and flexibility – without the worst: egregious exploitation. As the great Philippe van Parijs says:

[Basic income] provides a flexible, intelligent form of job sharing. It makes it easier for people who work too much to reduce their working time or take a career break. It enables the jobless to pick up the employment thereby freed, the more easily as they can do so on a part-time basis, since their earnings are being added to their basic income. And the firm floor provided by the basic income makes for a more fluid back and forth between employment, training and family.

The second development is the film I, Daniel Blake which has highlighted that the welfare state is costly, inefficient and dehumanizing, even driving people to suicide. As Max says:

Welfare in the UK doesn’t work. Claimants aren’t winning – they get messed around with sanctions, crap placements and form filling, all of which takes time and energy away from the jobsearch. Frontline DWP staff aren’t winning – they have no discretion, they have to deal with claimants presenting complex life issues, and they take a lot of shit from claimants. The public is not winning, because more and more public money is wasted on job centres, Work Coaches, civil servants, the crap Universal Jobmatch system, tribunals, appeals, and the wider social costs of a dysfunctional welfare system.

Again, this highlights the merits of a basic income. Its unconditionality would sweep away a lot of bureaucracy. Welfare recipients win because they no longer face harassment. Taxpayers win because the deadweight cost of redistribution is diminished.  

None of this is to say that a citizens’ income is a fix-all. It’s not. It should be accompanied by other policies to improve workers’ job opportunities and bargaining power such as expansionary macro policy, a job guarantee and stronger trades unions. And important questions remain: how do we best overcome the objection that a citizens’ income is “something for nothing”? How do we deal with the problems of especially high needs among the severely disabled and differences in housing costs? And does a state that has been unable to introduce Universal Credit competently have the capacity to implement such a big and important reform?

If we had serious political discourse, these questions would be properly discussed. But that of course is a big “if.” I used to think a basic income was too much to hope for. Now I fear that intelligent debate about one might be.

Comments

[Matt Moore]

Uber drivers may not be able to set prices, but who really can? Certainly not builders, plumbers, and other tradesmen. Those markets are very competitive.

What distinguishes the self-employed is that they can set their own quantitiy, not their own price.

On that definition, Uber drivers are obviously self employed.

[Luis Enrique]

I think you're over promising. For CBI to sweep away all the conditionality, assessments etc. it would have to be really sufficient to live on, including housing costs. Otherwise it will typically require a top-up, which will reintroduce all that stuff. But I've never seen anybody suggest a CBI at that level - I am not sure how it would handle children, but what would you need as a minimum to get by in London as a single adult, if after getting your CBI, you are on your own, no other benefits (including no housing benefits). What's a room in a shared house going at now, £600 pcm or so? More, I think. Or do you think after the introduction of CBI we would see social cleansing of London whereby those living on CBI just have to move to Preston.

[Warren Tarbiat]

I think the big problem of implementing a Basic Income would require it to be distributed via Land Value Tax. This would mean BI that is adjusted for the economic rental value across the country so they'd be different levels of BI instead of a "one size fits all" BI which is the most common.

Though you'd have angry home owning Baby Boomers coming out full force against it.

[Ben]

Unsubscribe. It's just drivel now.

Sort out the root cause: high land costs.

adieu

[Luis Enrique]

(I know you raise these problems but solving them should come before holding CBI up as a way to get rid of conditionality and assessments).

[Chris S]

"We have therefore a dilemma. How can we protect workers who lack bargaining power whilst at the same time not stifling new businesses and flexible forms of work?"

I think this is a terrible argument for UBI.

This amounts to little more than the idea that the state should subsidize workers - via UBI - because employers have come up with a business model that is unsustainable without stiffing their employees.

[Phil]

I signed on for a year after university, back in the early 80s. Back then it was generally agreed, on both sides of the political spectrum, that the unemployed were unemployed through no fault of their own & shouldn't be penalised for it; the only conditionality attached to my benefit was that I should turn up once a fortnight and sign for it, and at least try to turn up on time.

A system like that - where anyone who can't get a job has unconditional access to enough money to keep a roof over their head & food in their cupboard - seems utopian now, even though it was the unchallenged norm under both Callaghan and (first-term) Thatcher. This raises two questions. First, why use the current imperfections(!) of the welfare system to argue for UBI, instead of arguing for a welfare system that works properly? Second, if a decent welfare system is unattainable, why should we imagine that UBI would be any easier to achieve - surely it lies even further out on the utopian spectrum?

[Bob]

I prefer the Job Guarantee but agree with the thrust of this article.

If a firm cannot pay a living wage to its employees, we don't want that firm operating in the UK. It should be eliminated to make way for those who can pay the wage.

If that means there are insufficient jobs for all, then the government creates jobs and pays the living wage to fill in the gap.

Slave labour helps nobody.

[Bob]

"For CBI to sweep away all the conditionality, assessments etc."

voters would have to support giving people money for nothing...

"A system like that - where anyone who can't get a job has unconditional access to enough money to keep a roof over their head & food in their cupboard"

And something to do. Leisure costs money.

Of course as they (Callaghan/Thatcher) created mass unemployment they supported it.

[Bob]

"And important questions remain: how do we best overcome the objection that a citizens’ income is “something for nothing”? How do we deal with the problems of especially high needs among the severely disabled and differences in housing costs?"

Give people something to do. Something for something.

Under a JG, disabled, sick and elderly people are treated as working full time, and custom jobs designed merging into social care at the barely employable end.

[Per Kurowski]

Perhaps those robots or artificial intelligence forcing human workers into early retirements, need to generate payroll taxes too.

http://teawithft.blogspot.com/2016/10/let-robots-make-us-offer-we-cant-refuse.html

[Igor Belanov]

@ Phil:

'Second, if a decent welfare system is unattainable, why should we imagine that UBI would be any easier to achieve - surely it lies even further out on the utopian spectrum?'

The advantage of basic income over benefits is that it is generally universal, and not 'welfare' at all, but a citizen's right to their share of social income. Thus it is not a 'dole' with all the means-tests, box-ticking and state interference that entails, but something that can enhance freedom and give people more of a choice over how and when they work, study, train, care for others, enjoy leisure and so on.

It amazes me just how many people seem to think that 'arbeit macht frei' and want to force people to work more in a society where technology is eliminating jobs while increasing social wealth.

[Bob]

"Perhaps those robots or artificial intelligence forcing human workers into early retirements, need to generate payroll taxes too."

No. We are not having automation ruined by these fucking silly arguments. The only big issue is fuel, as commentator "Blissex" says.

Firstly tax pays for nothing. The US government can always pay for retired people. The US should abolish payroll taxes and expand social security. Whenever anyone including the government spends, government will get it back as tax unless money is saved. The person next down the line pays tax.

"The advantage of basic income over benefits is that it is generally universal, and not 'welfare' at all"

BS. There are just tax rises - big ones. Because the people behind BIG won't say regulate the banks and issue new fiat in risk free accounts at the central bank. That would be far too sensible a way to introduce it. Lets put up taxes and lose elections and then whine. Or even expand sonething like tax credits because when you give money to people and take it away again you get loss aversion effects.

[Kevin Carson]

How about a sort of Rawlsian Situtation universal insurance pool that a small percentage of everyone's Basic Income is automatically allocated to from birth, that would cover the additional needs of anyone who is born with severe disability or later becomes incapacitated?

[Bob]

There is a "pool." It is called the currency issuing government. Money is, or should be, irrelevant to the care of the disabled.

"that would cover the additional needs of anyone who is born with severe disability or later becomes incapacitated?"

If you are known to have a severe disability you *shouldn't be born*. For example if you had one less low functioning downs syndrome person to look after, that frees up care resources for elderly dementia and other developed disabilities. Test for it and force terminations.

[Jim]

I've never quite understood how a Job Guarantee (usually considered by the Left as a 'Good Thing') is any different to Workfare (usually derided by the Left as dehumanising and effectively slave labour). In both cases one assumes that if you refuse to work you don't get any money.

[Eddie]

Whoa!!!! Bob - read what you have written man. Are you seriously suggesting forced terminations for viable pregnancies as a method of saving money?

If yes, you're name's no longer "Bob-a-Job-Guarantee" but "Bob The Fascistic Cunt", you cunt.

[Bob]

"you refuse to work you don't get any money."

That's right. And it is worse than that. BIG means getting paid twice. Once to buy stuff other people produce and once to keep your own output. That's very unfair.

[reason]

"a job guarantee"
Now you lost me Chris. A job guarantee is a really bad idea. It undoes a lot of the benefit of a basic income by introducing really bad micro-economic design. How are you going to get a job guarantee to work meaningfully in the modern world with interdependent specialists and specialist equipment (not to mention potential regional issues). I see it creating more problems that it causes. And it interferes with one of the beauties I see in a basic income - social entrepreneurship, there is a distinct danger of more useful work being crowded out.

Besides which, I seriously believe that unemployment is largely caused by communities that are drained of money, and a basic income should help with that.

[reason]

of course I meant to say "I see it creating more problems THAN IT SOLVES." But somehow it came out mangled.

But seriously, it is a bad idea. Anybody so lazy that they prefer guaranteed poverty, to useful activity is not worth employing in the first place. What may be useful though is giving people genuine help in finding work (and if fewer people are unemployed that may be easier to achieve).

[Paine]

U need a set of numbers or else this is cloud 69 stuff !

[chris]

@ Paine - the CIT has shown some numbers here:
http://www.citizensincome.org/filelibrary/booklet2013.pdf
I'm not sure how helpful these numbers are, as a big issue is the dynamic effects: will a CBI reduce labour supply or increase it?

[Bob]

Addressing some of your concerns reason.

"How are you going to get a job guarantee to work meaningfully in the modern world with interdependent specialists and specialist equipment (not to mention potential regional issues). I see it creating more problems that it causes. "

I'm not sure what "interdependent specialists and specialist equipment" has to do with anything, so I can't answer that.

The JG is mostly creating unskilled work. But it will try to use skills if possible. If there is a say a lawyer on the JG, they will do a suitable job - say working at a Citzen's Advice Bureau.

Isn't mass unemployment and crime a huge problem?

"And it interferes with one of the beauties I see in a basic income - social entrepreneurship, there is a distinct danger of more useful work being crowded out."

Useful work is not crowded out. Only totally crap private sector jobs because people have that wonderful freedom. The JG is voluntary.

If there is currently high unemployment in your local area, the Job Guarantee provides a massive injection of spending. Job Guarantee people earn wages, which they spend in the shops. Local businesses sell stuff, expand and hire people on the back of that. Commercial life returns.
Job Guarantee work improves the look, feel and life quality of deprived areas, making them vibrant and desirable places to live and run businesses. Stuff that is run down, suddenly gets a fresh lick of paint and a polish.

If a big employer goes bust in a small town, then you already have a monoculture problem. One of the reasons for pulling people away from big employers is to introduce diversity into areas. The JG helps put spending and investment into areas and avoid these concentrated pockets.

But the way you deal with an influx is the same way as you would on JG startup. You put people on gardening leave while you create the jobs necessary. That maintenance payment allows the local economy to adjust and allows the new private businesses that spring up when a large company goes bust to establish and get going.

The population will accept that solution short term, and in the short term it does little harm. Hence why basic income 'trials' appear initially successful but over time fail.

Then you find people something to do as quick as you can. One of the first set of jobs to create is of course an expansion of the local JG facilities to help people create and find stuff to do.

If things self-organised, then there would be *no need* for a Job Guarantee or any other form of state intervention in the first place.

There is no more chance of 'laissez faire' providing things for everybody to do than there is in the system 'clearing' to provide everybody with a private sector job. It just doesn't happen or it already would have. After all you just 'start a business' and magically you'll have a sustainable income - not.

There are already millions of people on the level of support proposed for Basic Income with no possibility of obtaining other work - because the basic Says Law clearing structure does not operate as the mainstream suggest. The labour market matches people to tasks. Ultimately at some point you have to have something that matches tasks to people and gets those organised if you want to deal with the Scourge of Idleness.

So once you are doing something anyway, then we organise it so that you do something that shows your participation and that you enjoy doing, something that others consider useful, and *then* you get paid for it.

And it has to be organised or there won't be sufficient things to do so that everybody can show that they are participating.

This is all basic Beveridge stuff about creating sufficient liquidity in the Labour market so that it is a Seller's market.

UBI people are laissez faire individuals who believe in a free market in things to do. That is as much of a delusion as any other free market belief.

[Bob]

"And it interferes with one of the beauties I see in a basic income - social entrepreneurship, there is a distinct danger of more useful work being crowded out."

mmm...

https://en.wikipedia.org/wiki/Enterprise_Allowance_Scheme

"The Enterprise Allowance Scheme was an initiative set up by Margaret Thatcher's Conservative UK government which gave a guaranteed income of £40 per week to unemployed people who set up their own business.[1] It was first announced on 13 November 1981,[2] and piloted between January 1982 and July 1983, funding 3,331 individuals.[3] Introduced nationwide in 1983 against a background of mass unemployment in Britain, it went on to fund 325,000 people, including Creation Records head Alan McGee; Superdry founder Julian Dunkerton; artist Tracey Emin and the founders of Viz magazine.[4][5] Anyone wishing to claim money under the scheme was required to fund the first £1000 out of their own funds, and also to produce a basic business plan.
Proponents of the scheme believed that it would have a great impact on unemployment, and support entrepreneurship. It was a UK tax reliefs launched in 1994. Critics pointed to figures which suggested that one in six of the start-up businesses failed in the first year, and said that it had no significant impact on unemployment figures as most of the start-ups were sole-trading operations.[1]"

Sure. How bout this. Take your business plan down to the Job Centre and pitch it to them. They’ll even help you write that business plan. If the business support people there like the sound of it, then you’ll get to join the Enterprise Allowance Scheme — three years of Job Guarantee support while you get your business off the ground.

[reason]

Not sure what happened I replied to Bob last night and they are not there.

Basically the answer was
1. By social entrepreneurship I don't mean people looking to make money from innovation, but people looking to solve social problems via innovation.
2. There is no such thing as unskilled labour. Think about it, every job involves learnt skills. Makework schemes are bound to run inefficiently because they will be unable to build or maintain teams of people with specific experience.

[Bob]

"There is no such thing as unskilled labour. Think about it, every job involves learnt skills."

Agreed. I should have put "unsklilled" in brackets.

[Sam]

Luis: "For CBI to sweep away all the conditionality, assessments etc. it would have to be really sufficient to live on, including housing costs."

Which would, in itself, increase housing costs. Because landlords in a shortage situation will charge whatever the average tenant can pay, which is simply total income (CBI included) minus living costs.

As others have said, the housing market is the elephant in the room on this issue.

[Sam]

Also the other problem with a CBI is that you'd have to give it to people the Daily Mail hate and regard as lower than worms.

I mean, can you see a government minister seriously defending giving the CBI to convicted violent criminals?

[reason]

Sam
I take it you mean outside of jail? In which case the alternative question is - what will a free convicted violent criminal do if you don't give him a CBI?

[reason]

Sam,
Re housing - my personal view on this, is to ignore it. CBI should be enough to live on in some places and with some housing arrangements, but not necessarily in any given place with any given housing arrangement. People are quite free to take advantage of private insurance if they want to hedge against the risk of losing their current housing arrangement.