Inequality and Brexit

The Citizen’s Basic Income Trust is an educational charitable trust, so we cannot involve ourselves in the complex political debate about Brexit, and nor would we wish to do so. However, when public policy issues impinge on the Citizen’s Basic Income debate, the Trust clearly has an obligation to participate in debate on those issues. So, for instance, if there are clear connections between inequality and Brexit, and equally clear connections between Citizen’s Basic Income and the tackling of inequality, then we cannot avoid joining in that complex debate.

As a 2017 publication from Social Europe, Inequality in Europe, makes clear:

‘Inequality is the defining issue of our time.’ This is what then US President Barack Obama said about inequality at the end of 2013. Almost half a decade later we unfortunately have to conclude that it still is one of the defining issues of our time and that we have seen the beginning of a political feedback loop. The unresolved inequality … amongst other things contributed to the Brexit vote in the United Kingdom and the election of Donald Trump in the United States. It was not just the persistent patterns of huge inequalities between different parts of society but also the growing frustration that political systems have become unresponsive to the concerns of people suffering from the current state of affairs. When analysing the challenge of right-wing populism it is crucial not to do so at a superficial level only trying to dissect the communication techniques and understanding the current electoral appeal of populists – as important as this is. It is at least equally important to try to understand the socio-economic and political conditions that enabled those communication techniques to develop electoral appeal. Inequality is a huge part of this background story. [1]

The first and most obvious connection between the persistence of inequality and the Citizen’s Basic Income debate is that the implementation of a Citizen’s Basic Income would provide any society with a powerful equalisation mechanism: the same amount of money for every one of the same age; the same rules for everyone; the same secure financial platform for everyone; similar relationships between additional earned income and additional disposable income for everyone; and so on. The social cohesion effect could be similar to that of the NHS.

The second thing to say is that if ever a Citizen’s Basic Income were to be implemented, then it would be essential that the scheme as a whole, including any associated changes to existing tax and benefit systems, should reduce rather than increase inequality. Unfortunately, it would be all too easy to implement a Citizen’s Basic Income scheme that would increase rather than reduce income inequality: for instance, by abolishing current means-tested benefits rather than adapting them, or by increasing the basic rate of Income Tax and not the higher rates. There are perfectly feasible Citizen’s Basic Income schemes available that would reduce rather than increase inequality, and it will be essential to implement one of those. It is therefore an absolute requirement that if ever a Citizen’s Basic Income gets close to being implemented, the proposed scheme as a whole should be tested using microsimulation methods in order to ensure that the scheme reduces income inequality.

Third, and perhaps of most topical interest, is the correlation between communities that voted ‘Leave’ in the 2016 referendum and the high levels of poverty, low skills levels, and generally ‘left behind’ characteristics, of those communities. [2] Given that the UK’s population is among the least knowledgeable about the European Union, and only half of the population believe that they know how the EU works, [3] a social scientist is obliged to come to the conclusion that, whatever might have been on the referendum ballot paper in June 2016, those voting ‘Leave’ might have been voting against inequality, low skills, and being left behind, and those voting ‘Remain’ might have been recognising the positive functions of the European Union. This means that what is required is a reduction in inequality, and greater encouragement and opportunity to train in new skills, and that what is not required is Brexit.

An income-inequality-reducing Citizen’s Basic Income scheme would reduce income inequality. It would provide the same amount of Citizen’s Basic Income for every one of the same age, thus binding us together as a society. It would ensure that the same rules relating to Citizen’s Basic Income applied to everybody, rather than the population being divided between one set of rules for means-tested benefits and another for those not on means-tested benefits. It would provide the same secure financial platform for everyone, providing them with more choices as to how to balance different kinds of activity. It would move everyone towards similar relationships between additional earned income and additional disposable income, thus reducing the number of people facing high employment disincentives. It would provide increased encouragement and opportunity to train in new skills, thus reducing the inequality between those with skills and those without. And so on. The combination of these different increases in equality and skills would have a significant effect on the overall levels of equality and skills in our society. The extent to which that would affect the political process would be interesting to watch: although it would of course be too late to affect the result of the EU referendum.

 

Notes

[1] Inequality in Europe, published by Social Europe in 2017

[2] Matthew Goodwin and Oliver Heath, ‘Brexit vote explained: poverty, low skills and lack of opportunities’, York: Joseph Rowntree Foundation, 2016; Michael Higgins, ‘Rebalancing Europe: ecology, economics and ethics’, Social Europe, 2019

[3] European Commission, Public Opinion in the European Union, 2015

 

 

 

 

Footnotes

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