Prospects for Basic Income
A basic income is an unconditional, non-withdrawable, non-selective payment to every individual citizen. In other words, we all would receive the same amount of state support at a level sufficient to provide genuine quality of life regardless of whether we were in paid work.
To many people hearing about basic income for the first time it sounds like a pipe dream, a post-scarcity policy lifted straight out of science fiction. But then on Tuesday the Scottish Government surprised us all with this bombshell.
“We will fund research into the feasibility of a citizens’ basic income scheme.” – Scottish Government Tuesday 5th September
A conversation that started with Fife Council in 2015 has become a partnership between four local authorities and the Scottish Government about running basic income pilots across Scotland.
Between them, Glasgow City, Edinburgh City, Fife and North Ayrshire Councils are responsible for the welfare of 1.6million Scots, that is one third of the population of Scotland potentially eligible to participate in a pilot. More councils are expected to come forward to join discussions.
As a society we are faced with increasingly complex challenges around inequality and insecurity. The solution is not to pursue ever more complex solutions and mutations of the status quo, with the counter-productive consequences of poverty traps and financial dependency, but to embrace the simple and straightforward idea that each individual is deserving of the happiness, health, and security that an unconditional basic income would bring.
So is a basic income affordable? Well the answer to that question is that it depends what we are talking about. If we were to distribute the current spending on welfare amongst every UK citizen equally we could have a basic income today of £4,000. This is obviously woefully inadequate. One suggestion is to have a basic income set at the UN poverty benchmark, which on paper would eliminate poverty at a stroke, but I don’t think that being on the cusp of poverty is the minimum quality of life to which we should aspire for Scotland. So we need to think about alternative models of generating revenue.
One simple and popular answer is to reform income tax so that we all pay higher taxes, perhaps even eliminating the personal allowance, and then setting a basic income at a level that there is an income where people ‘break even’. It is easy to forget that in the 70s the top rate of income tax was over 90%, yet we still had millionaires. We all have a greater stake in society and our communities than our income tax would suggest and I see nothing wrong in increasing taxes to reflect that. By taxing wealth and redistributing it amongst everyone, we lift the poorest out of poverty and insure the wealthy against it.
Currently, of the 20 largest economies in the world Great Britain ranks 15th for corporation tax, with only Russia, Turkey, Korea and Saudi Arabia taxing less. In 2020 we will be 19th. There is clearly scope for raising additional revenue, even more if we devote as much time to tax evasion as we do to chasing benefit “cheats”.
Versions of a basic income already exist in Alaska and Norway where a sovereign wealth fund has been established so that the profits from the oil trade are distributed amongst the citizens. These can take time to establish but are a worthy goal. Scotland obviously has not benefitted from its oil in the same way, which is another story, but the same can be achieved through the use of other national resources such as renewable energy, or by taxing emissions.
In many ways we already receive a form of basic income in the form of public services. What is the fundamental difference in a common income to protect against poverty, even if you are not poor, and a health service to protect against illness, even if you are healthy? The point here is that when a problem has many proposed solutions the safest conclusion is that the problem can be solved. Whether or not a policy is affordable is ultimately a question of whether or not it is ‘worth it’. So how can we decide if a basic income is worth it based on some pilot schemes? Pilots are not reality on a smaller scale, but still offer an opportunity to learn, and we need to decide how we measure success.
Proponents of a basic income claim that it would have a large impact on many of the problems caused by inequality and poverty, as well as free people from financial dependency and offer a safety net for those industries soon to be automated away. So how do we know if it is working?
Initial results from the recent basic income experiment in Finland show a large reduction in anxiety amongst those receiving a basic income. In many senses, perhaps anxiety is the best possible measure for the success or failure of basic income. If you think about it, the whole point of society is to improve the lived experience of those members within it. We target living standards, health, crime, and poor education because they are detrimental to the experience of being alive in Scotland. Why measure anything else other than whether basic income makes people happier? We cannot let the basic income debate be dominated by questions of cost savings elsewhere, though these would be significant, because you cannot measure the human experience in pounds and pence.
A basic income is a simple idea easily misunderstood. In principle it is a politically neutral idea, giving both greater liberty to an individual and reducing social inequality. In practice we face a battle against headlines about ‘money for nothing’, and a ‘scroungers charter’. No doubt we will see fearmongering about mass immigration that the world will turn up at our door with their hands out.
Sensibly planned pilots across Scotland that complement rather than replicate each other, set at sufficiently high levels to make an impact, and lasting for years rather than months are essential to having a rational debate about starting again with the welfare state. These will take time to plan and implement, and longer to understand the effects. In the meantime read beyond the headlines and keep an open mind.
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