Promoting Income Security as a Right: Europe and North America, by Guy Standing

London: Anthem Press, 2004 £24.99. Order this book

The English utilitarian philosopher, Jeremy Bentham, called human rights “nonsense on stilts”. In fact he was amongst the most humane of men of early 19th century thinkers; but he did not regard the idea of rights, with its normal correlative of duties, as a helpful concept here.
Many who share his doubts have been silent on the matter. If you want to outlaw torture or censorship or imprisonment without trial, it seems pedantic to quibble about whether these causes should be called human rights or not. The incorporation of the European Charter of Human Rights into British law was a great advance, whatever the label. A stand on human rights does tend to separate those who believe in humanity and due process from those who believe that the so-called ends justify the means.

But when Basic Income is proclaimed as a right, I begin to see the point of Bentham’s quibble. A rich and humane society can afford a minimum subsistence income for everyone without imposing conditions and obligations. If everyone has a basic sum on which he or she can fall back either in times of adversity or in order to withdraw partly or fully from the normal labour markets in order to engage in some less rewarded activity, whether altruistic, artistic or personal, a few of the beneficiaries may well choose to become Californian surfers. I would argue that he or she should be able to do so in a free society and that the cost of such dropping out to the rest of us is unlikely to be intolerable. But to say that the Californian surfer has a right to his activities is carrying the concept of right a bit too far.

One problem with Promoting Income Security is that so much of the book is devoted to diverse, and often convoluted, attempts to label a Basic Income as a right. The 34 essays in this book contain a mass of fascinating material into which anyone interested in Basic Income, whether in favour or against or agnostic, would do well to dip.

I was first drawn to Basic Income, which had not yet been christened with its name, several decades ago. This was because I was attracted by the libertarian aspect of capitalism, which enabled people to “do their own thing” and to choose their own occupations. But I was not so attracted by the continuation of the work-ethic aspects, which were important in its historical development on the lines explained by Max Weber and many others. I hoped we were approaching a time when these aspects could be dropped and we could instead give people a choice: they could opt in to the ordinary labour market with its rewards and hardships; they could opt out provided they were willing to live at a sustainable but modest standard of living; or they could compromise and take a poorly paid job, topped up by this universal payment to follow their own way of life whether as artists, lotus-eaters or whatever. This kind of compromise would have been impossible during most historical periods when a subsistence Basic Income would have been so near the normal wage that nobody would have found it worthwhile to work for pay. It is for this reason that the early 19th century Speenhamland attempts in this direction collapsed.

The object of a Basic Income is to make every citizen into a rentier in a small way. Private property and unearned income, so denounced by the Marxists, are not inherently evil. The trouble is that so few people have them (apart from their own homes), with all the benefits they provide of personal independence. Surely in the better society to which some of us aspire, these advantages should be more widespread.

A further reason for my interest was the development in the 1970s and 80s of a much larger number of involuntary unemployed than had been the case in the post-war period. Not to beat about the bush, this reflected union-based and other labour market institutions which priced people out of jobs – something which New Labour admits but hides under a cloud of verbiage. I believed that reformers had to face up to the fact that the market clearing pay available to some workers might be below that required for any decent sort of existence.

There is yet another argument of a more mundane kind. Must citizens both pay taxes and receive benefits from the state in an apparatus of such complexity that only a rocket scientist turned tax expert and welfare counsellor could have any hope of understanding it? Why not simplify the structure by offsetting at least some of these transactions by a single payment either from the citizen to the state or the other way round? Milton Friedman and some of his followers envisaged a negative income tax which would replace state welfare of all kinds, including benefits in kind such as health and education. Some others on the left envisaged a Basic Income paid in addition to every state service now provided and every payment already made.

It would be realistic at this stage to regard a Basic Income, whether paid across the counter or in the form of a negative income tax, as a substitute just for cash payments of all kinds, whether state pensions, unemployment benefits, sick pay or anything else. Even then there are problems enough. For something like the British Government’s Social Fund would still be necessary for people so placed through health or circumstance that they could not manage on the Basic Income through no fault of their own.

There is a trade-off between Basic Income and the citizen stake, adopted in embryonic form under the British government’s Trust Fund (“baby bond”) scheme for endowing each citizen with a modest capital sum, available when he or she gains adulthood. In some sense they are very similar, as the baby bond can be regarded as the discounted value of future Basic Income payments. From a libertarian point of view the bond is preferable as the holder is free to decide when to draw out the funds. On the other hand no civilised society would want someone who had misspent his initial endowment to starve in later life. So the bond could never be a complete substitute.

In its original form, linked with negative income tax, the Basic Income idea was often attacked from the left as a plot to get rid of the welfare state. But there was another argument which began to make some headway among the left. This was that despite its high costs the welfare state was not reaching some of those who needed it most. One reason was the conditionality of benefits, which deterred so many from applying and which made others ineligible. Indeed Basic Income has now become linked with all too many fashionable anti-capitalist causes such as anti-globalisation and extreme environmentalism or more simply and sadly with the “lump of labour” fallacy that asserts that there are not or will not be enough jobs to go round and so some other form of support is necessary.

Unfortunately this book leans, not completely but in tendency, towards such views. There is a real danger here. For advocacy in this form not only puts off the enlightened minority among anti-socialist politicians who might otherwise give it some house room. It also puts off consensus leaders such as Tony Blair or any likely successor, who would run a mile from anything they see as far-out sandal-wearing socialism.

There is indeed an unfortunate tendency for Basic Income to be seen as a messianic movement for a select group rather than as a device for tackling a weakness in market capitalism. From the latter more pragmatic point of view the most interesting chapter in this book is by Karl Widerquist in which he discusses the four US experiments and the one Canadian one in local negative income tax that took place over the period 1968-80. Although 336 scholarly articles were written about them they did not prove decisive. “Both Basic Income supporters and opponents could quote the findings of these experiments with equal conviction.” The author’s own opinion is that “none of the facts were persuasive enough to cause either supporters or opponents to change their mind.” The experiments indicated very tentatively “that a Basic Income guarantee is financially feasible at the cost of certain side effects that people with differing political beliefs may take to be desirable or disastrous.”

Surely the way ahead is to look at each country’s existing social security system, examine how nearly it approaches a Basic Income, and see how the gap can be narrowed and eventually closed. In the UK one element of such a system already exists in the state pension. Another element consists of child benefits unconditionally available to all.

The present Labour government, building on the unsung efforts of its predecessors, has tried to remove the work disincentive effect of the ordinary dole by a system of in-work benefits. In addition child benefits are now topped up by child tax credits related to family income.
The most promising advance at present relates to state pensions. The complications of the pension credits, and their incomplete take-up, are creating a consensus in favour of a straightforward increase in pensions indexed to earnings, which would in effect create a Basic Income for those of pension age.

The most difficult task is to persuade governments to loosen the conditions applying to in-work benefits. Professor Tony Atkinson, who writes in this volume, has previously suggested a Citizen’s Participation Income in which the definition of work would be widened to include full-time education and training, intensive care work and approved voluntary activities. This could be a halfway house towards removing the in-work condition. The most difficult part will be to remove the taper by which benefits are withdrawn at a surtax rate as earnings from work increase. But if only we could bite this bullet the whole case for capitalism and market forces would be easier both to make and to believe: not a consideration which will weigh too heavily among some of the contributors to this book.