Citizen’s Income Newsletter 2003 – Issue 2: Addendum

This ‘contribution to debate has emerged from debate within the Green Party and is therefore important. The scheme in question is a full citizen’s income of £500 per month, which of course isn’t the only Citizen’s Income Scheme on offer, but it is important to debate such possibilities.

Where are the CI Emperor’s clothes?

By Tim Flinn

Several Green Parties include CIS in their manifestoes. In recognising CI virtues, however, political parties have also to anticipate negative
criticism by seeking out and sealing any chinks in the CI armour. This
article shares some of the consequential controversies recently aired over the web by one Green Party. Any conclusions and opinions are the writer’s alone.

Several problems were discussed, including 1. understanding CI 2. the consequences of CI 3. delivering CI 4. universal CI v selective CI (effectively: civil rights v civil duties).

1. There are, presumably, several forms of CI. Our version would guarantee every citizen sufficient to provide basic needs of food, clothing, shelter and heating. Pensioners and the infirm receive extra payments, and there is to be a means-tested extra allowance for housing costs. Student grants would be restored. Detailed figures are promised before introduction and the whole appears to be funded at least initially through higher personal taxation and the ending of most other forms of social income. The case for favouring CI over, say, the present welfare payment system, actual CI levels, and definitions of ‘citizen’, ‘basic’ and ‘sufficient’ are to appear in supporting literature.

2. The many advantages of CI (ending stigma, increasing up-take, etc) are well known to this readership, but that doesn’t mean CIS is problem-free. Here, very briefly, are five stumbling blocks:

A. its cost. There is no agreement yet about what level to set CI at, but assuming 56m people each receive an average of £500 a month (and could one have much less if all the basics are to be covered?) the annual cost is £336bn. That compares to UK’s total government tax income for 2001 of £390bn, which leaves the Chancellor with a very large revenue ‘black ‘hole’. To fill this requires a substantial rise in income tax; the more so if, as some claim, claw-back from high earners offends basic CI principles. It is a discouragement that there still lacks a specimen set of government accounts which would set all the relevant finances into context.

B. CI breaches GATT/WTO rules by subsidising wages. This means the UK will have to stop its international trading. One wonders if we greens, (and many of us interpret, and so despise, GATT/WTO as a ‘profits-before-people’ organisation) have fully thought this one through? One wonders, in effect, how much electoral support there will be for a policy that could destroy the British economy? In trying to solve the problems of wealth redistribution, radical parties almost always neglect the initial problem of wealth creation. A reply that a Green economy would solve this because it would be very different to the present economic system begs the response: first show me!

C. CI will be inflationary. For example (as my own work many years ago on the effect of including the salaries of both partners for mortgage purposes showed) housing prices rise in company with the ability of people to pay them. In fact, the price of anything that is subsidised must, in an open economy, rise.

D. For that last reason CI runs the danger of encouraging objectively
undesirable conduct such as Wumpism, of which more later.

E. Abuse. There are several ways this can occur, but an obvious one is that children may not receive the benefits for which CI is intended to pay. I’ve heard it argued that as ‘only a few’ parents will spend the child’s CI on drugs instead of food (and as ‘this sort of thing takes place under the present system anyway’) these occurrences aren’t germane. This response strikes me as a cop-out. It is preferable (and makes more sense) to design out abuse than to turn an ineffectual eye to it. To that end we should recall that benefits already arrive in three
ways: in kind (e.g. education, NHS); in cash (e.g. child allowances, the
dole); and as vouchers (e.g. OAP fuel, travel passes). To ensure that
children get fair play it seems to be worthwhile to at least discuss the
possibility of specific vouchers for fresh food, good clothing and even
adequate parenting. WW2 experience of the benefits of some of these
practices is very favourable (which would in any case apply to increasingly few citizens). To resist a serious discussion about this because of perceived problems of added big-brotherism, bureaucracy, social control or ‘whose opinion counts?’ amounts to an ultimately self-defeating sweeping-under-the-carpet. Public means must only go on publicly approved ends. We must believe that where there is a will, there is a way.

3. The delivery of CI has not anywhere been worked out satisfactorily. Some promote funding it from Land Value Taxation, but as this does not solve the actual delivery problem the LVT people do, in their enthusiasm to throw out income tax, also throw out a very useful baby with the bath water. Leaving aside the vices and virtues of personal taxation, the Inland Revenue Service already has, for CI purposes, a potentially vital data base and redistribution mechanism, namely positive and negative taxation. With every citizen identified (given suitable safeguards) on a modernised national computer and through the use of a fraud-proof smart card system, the transfer of money from those with too much to those with too little is much simplified, and few (if any) will be able to slip through the cracks.

4. CI and universality versus selectivity. It has been argued that CI is a universal civil right, but accompanying civil rights are some often
conveniently forgotten about civil duties. Our discussion has recently gone down the track of a debate about whether or not the Wilfully Unemployed, or Wumps, should receive CI only in return for a confirmed and regular working week of worthwhile (as defined by a citizens’ jury) charitable (i.e. unpaid) work. The case for bowing to Wump self-exclusion from the work force (refusing to subsidize it, that is) includes a perceived need to reduce the work-shy culture; to support the growth of regular work habits; to benefit society through many more helpers, and a desire to improve the self-esteem of the erstwhile opted-out. It should be noted that carers, the infant, the infirm and the insane are exempted from the Wump category, as are those who wilfully don’t work, but don’t also demand benefits. The intention is not to force people to work, merely to refrain from subsidising laziness. The position of creative people has been seen as a problem case, but is it? Artists have only the same rights and duties as everyone else. It is a
common observation that people will always find time to do the things they really want to do. An ordinary person can write several books and plays, complete several degrees, design and build a couple of houses, produce a lot of art work, and much else, all alongside forty five years of full-time work and a family. The case for subsidising Wumpism includes a stipulative definition of human rights that irrationally detaches rights from duties. It also makes a supposition that the numbers of Wumps will be so small (despite the everyday observation that the effect of subsidising things is to encourage them) as not to much matter. This is inconsistent, as the same numerically dismissive attitude is not also applied to, say, murder. There is a familiar challenge here to produce a system that designs out undesirable side effects and consequences. A tolerant regard for Wumpism serves only an underestimation of the cost to society of people deliberately opting out of worthwhile work. Given certain assumptions, my own calculations are that 125000 Wumps ( a low figure), deprive the UK economy of at least £15bn annually. Such a figure spent correctly would in ten years solve our energy and transport problems, and probably more. That is a high opportunity cost to pay for a dubious extension to the valuable human rights principle. As most, if not all, existing benefits are handed out on the basis of dessert and need (as easily identified and dealt with through an enhanced Inland Revenue data base), the requirement upon CI advocates to justify not doing the same seems strong. For Green Parties there is the additional consideration that we believe in recycling ‘rubbish’, and so we cannot afford to ignore the need to also recycle fellow citizens who have
been dumped on (or dumped themselves on) the human scrap heap.

In conclusion, the undoubted advantages of CI should blind no one (least of all those trying to sell CI to an ignorant and sceptical public) to its several apparent loose ends which need, therefore, to be tied up before rather than during or after an election. For some people, promoting CI is quite like a tout flogging tickets for seats on a potentially wonderful aeroplane, but one which both lacks engines and an even theoretically demonstrated airworthiness certificate. In short, to vote for CI at the moment may be akin to buying a pig in a poke. Shorter still, it appears the CI Emperor has few or no clothes.
Naturally, I’m hoping most of the foregoing is wrong and that CI
enthusiasts will so prove by sending me sensible, BRIEF, and foolproof data to the contrary (please, though, NOT mere opinions, speculations, statements by ‘authorities’, or books to read, as we’re up to our ears in these already. What we really need is ‘killer’ evidence and peer-reviewed research). I will pass everything useable on to our debaters.

Tim Flinn.