Timmy elsewhereFebruary 9, 2015 Tim WorstallTimmy Elsewhere47 CommentsAt El Reg, on basic income and the truth on the secret relationship between me and Natalie Bennett of the Green Party. previousHere’s an idiot ideanextTimmy elsewhere 47 thoughts on “Timmy elsewhere” DBC Reed February 9, 2015 at 11:14 am AS the Green Party also believes in stripping private banks of the power to create money (to use a famous Martin Wolf headline) it would be perfectly feasible for a Green State to create and distribute what money it wants. Where it might become a bit radical would be if a calculation were made to work out the total possible capacity of capital equipment and labour working flat out and to distribute an unearned Income for all, (you could call this a National Dividend), to cover the gap in demand. But this Douglasite Social Credit idea is nearly a hundred years old and obviously unrealistic in the UK where the hegemonic public school wankers believe that putting up rent and property prices while decreasing real wages is sound economics. Ian Bennett February 9, 2015 at 11:32 am It’s to be expected that lefties would be in favour – “let’s give people some of other people’s money” – but it alarms me somewhat that so many on the right also support the notion. The fact that, from an economic viewpoint, it might “work” does not mitigate the fact that, from a moral viewpoint, it is utterly wrong. DocBud February 9, 2015 at 11:45 am I’m with Ian Bennett. I don’t need a UBA and would prefer that the government didn’t take it off me in the first place. Giving everyone a universal right to a UBA will validate the life choices of those who prefer to live off of others. abacab February 9, 2015 at 11:51 am But the Greens really can’t square the living wage with their open borders policy and their desire to reduce the UK population. These are mutually contradictory. Ironman February 9, 2015 at 12:19 pm Actually we would be no more “giving people some of other peoples’ money” than we are now. So it really is no less moral than what we have now. In fact, given the “tight” new benefit cap that is being proposed, it is probable that we will be giving people quite a bit less under a UBA than we are now. The biggest problem I would have with a UBA – negative incoem tax – would be entirely practical. The transisition from one model to another is proving problematic enough with Universal credit; this would dwarf those. Increasing PA for IT to £20k would be a start as it would set the point at which ‘UBA minus tax’ would be zero (or there would be no negative and no positive IT charged). This, however, leads to another practical difficulty: politics. The idea would flounder, with beautiful irony, on the rock of objections from the Greens’ fellow travellers on the left. As soon as it becomes clear that “the 1%” are also entitled the balloon would go up. I use a sensible increase in PAs as a good example. Just look at the outcry from Richard Murphy, Howard Reed and the assorted left arses. Even Jolyon Maughem’s brain took a hike that day. Ironman February 9, 2015 at 12:21 pm BTW DBC, you just don’t know what you’re talking about. JeremyT February 9, 2015 at 12:47 pm By removing the incentive to contribute to the community, UBA converts citizens to helots & so the community becomes defenceless. See end of Bronze Age kingdoms and Roman Empire. Ironman February 9, 2015 at 12:53 pm “…UBA converts citizens to helots…” What, more than does our present system? Gamecock February 9, 2015 at 1:05 pm If I were a merchant, I would raise my prices. I.e., the marketplace will react to the flood of cash. Inflation – and the subsequent loss of any actual purchasing value of the free cash – should follow. Richard Allan February 9, 2015 at 1:17 pm I’m going to bang my usual drum of being unable to figure out why so many otherwise intelligent people have been seduced by such a stupid idea. A Job Guarantee dominates UBI on practically every measure of efficiency. ukliberty February 9, 2015 at 1:17 pm By removing the incentive to contribute to the community, UBA … One of the points Tim makes is that means-tested systems also remove incentive. Ironman February 9, 2015 at 1:46 pm ukliberty Indeed. And there is nothing to say it need be more expensive to the gov’t than our present system Martin Davies February 9, 2015 at 2:01 pm Greens get into power as government I will move overseas along with my business. Staying for loony policies would not be worthwhile. Ian Bennett February 9, 2015 at 2:20 pm Ironman: Actually we would be no more “giving people some of other peoples’ money” than we are now. So it really is no less moral than what we have now. What was your point? That it’s fine to replace an immoral system with another immoral one? Ian Bennett February 9, 2015 at 2:22 pm And actually, it really is less moral. At least we now expect people to do something in exchange for getting some of other people’s money. Ironman February 9, 2015 at 2:36 pm Do we really? We currently have a whole raft of benefits that are actually predicated on the recipent NOT doing anything and not being able to do anything in return. Let’s all say what we mean shall we: some people on this blog believe that ANY benefit system (other than perhaps workhouses) is immoral and the recipients underserving. So there is in fact absolutely no replacement system that would be acceptable to them. ukliberty February 9, 2015 at 2:53 pm Ian Bennett, At least we now expect people to do something in exchange for getting some of other people’s money. To what are you referring? The long-term unemployed who are compelled into the ‘work programme’ (nice little earner for the participating employment agencies who help people with their CVs and make sure they search jobsites) and then into ‘workfare’ (nice little earner for businesses like Tesco and Argos who don’t have to pay anything let alone the minimum wage for the work)? ukliberty February 9, 2015 at 3:15 pm What was your point? That it’s fine to replace an immoral system with another immoral one? Assuming we should deploy some kind of ‘safety net’, what is the best (or least bad) system? Interested February 9, 2015 at 3:24 pm @Richard Allan The Charles Murray case for a Citizen’s Income (see In Our Hands) is an attempt to do three things. 1. To remove some of the complexity and hands-in-the-till that attends the current system of benefits (he’s on about the US, I’m pretty sure it’s worse here). He says eventually it would save money. 2. To provide all people with a basic standard of living. I’m not in favour of people starving, nor of scrounging, it’s thus a tough one for me. But it’s made easier to accept by (3) 3. To incentivise some good behaviour eg how kids are raised. Too much detail to go into here, but the (very short) book’s worth reading. Ian Bennett February 9, 2015 at 3:31 pm ukliberty: To what are you referring? At least pretending to attempt to find work. some kind of ‘safety net’ A guaranteed income, paid from other people’s taxes, with no requirement to do anything in return, is not a safety net, it’s a hammock. Ironman February 9, 2015 at 4:01 pm Ian Bennett ALL benefits are a guaranteed income paid from other peoples’ taxes. PF February 9, 2015 at 4:23 pm I can see a practical problem. There are a substantial number of people who have no desire to claim benefits (It’s in the DNA). Let’s say you’ve got a partial income, be it P/T / investments / whatever, and you natural instinct may be to do extra work to top income up to a level you regard as satisfactory or adequate. This could easily cover quite large numbers of people. This proposal would remove any incentive at that stage for people like that to go out and pursue that work to “top up”. I can easily see how the net effect of all of that could be negative. If we want to disincentivise people from benefits, then (and promptly takes cover) why not demand some element of work for any benefit taken (with usual short term provisos), be that help to get back into work, and / or which slowly morphs into actual work the longer the benefit is claimed (oe something)? Though I do like the simplification idea (get rid of PA’s, simplify the PAYE system and all that), but shouldn’t it first pass the test of not making life too easy for those looking to satisfy rather than maximize? Edward M. Grant February 9, 2015 at 4:47 pm If a ‘basic income’ is enough to live on, a significant number of people will just stop working. If it’s not enough to live on, people who won’t or can’t work will still need to demand more welfare benefits to survive. ‘Basic income’ is just the latest nonsense from lefties trying to introduce Communism through the back door. It won’t work, and can’t work, because it incentivizes people to not work. Bloke in La Mancha February 9, 2015 at 4:56 pm In all the discussions of CBI and its variants that I’ve seen, and there are a lot of them about the web, I’ve never read what to me seems the best argument against it- it would not last five minutes in its intended form. At the first subsequent election the Labour leader of the moment would promise ‘help’ to all those who had spent their income on drink, drugs, lottery tickets, bridges in California or failed business ventures, and in the blink of an eye we would be paying CBI and welfare on top. I’m fairly sure this would happen. ukliberty February 9, 2015 at 5:05 pm Let’s say you’ve got a partial income, be it P/T / investments / whatever, and you natural instinct may be to do extra work to top income up to a level you regard as satisfactory or adequate. This could easily cover quite large numbers of people. This proposal would remove any incentive at that stage for people like that to go out and pursue that work to “top up”. Surely that depends at least in part on the rate? What sort of numbers do you think proponents are talking about? The numbers I’ve seen proposed for the UK range from £50 to £150; for example, for 25 year olds and older, the Citizen’s Income Trust proposed £71 a week. This would hardly provide a life of luxury particularly after you have spent some of it to pay for food, clothes and utilities. PF February 9, 2015 at 5:36 pm “This would hardly provide a life of luxury particularly after you have spent some of it to pay for food, clothes and utilities” Of course not, by itself? The point I was making is where this free income may be used to “top up”, whereas previously one might instead have opted to pursue additional work in order to top up. Say that you need £5K extra income per annum (on top of what you have) to “satisfact” (to use a Tim expression). If the basic income concept doesn’t exist, it’s simple, you have to work for it. With free income, actually, why bother? ukliberty February 9, 2015 at 5:42 pm If UK citizens will only have £72 a week income, why wouldn’t most of them try to seek remunerative work to get additional income? PF February 9, 2015 at 6:05 pm ukliberty “If UK citizens will only have £72 a week income, why wouldn’t most of them try to seek remunerative work to get additional income?” Not sure if that is in response to me? I agree with you, if they only have that to start with. But how much work? They might be tempted to work just enough to “satisfact”, and which may be less work than if they didn’t have that basic free income. It’s just a repeat of what others are saying above; ie a form of partial “disincentivisation” if you can get something for free. Ie, for those that would naturally avoid pursuing benefits, what’s the economic benefit of this to the treasury? Ironman February 9, 2015 at 6:37 pm I think Tim was talking about an annual amount of about £6600 with a 30% basic rate of tax- there would of course be no PAs anymore. This is, as ukliberty points out, hardly Nirvana for a would-be benefit scrounger. Bloke in La Mancha Yes, I too think it would flounder on lefties just not getting it; see also my earlier.comment. Or perhaps some would get it but would be too keen still on creating their client state. Jim February 9, 2015 at 7:45 pm I’ve always been in favour of a citizens income for the main reason it would remove the perverse incentives that many face through the benefit system – incentives at actively lie, cheat and avoid work, because that way you get more money. Regardless of the economic benefits/losses it would create, I would argue it would create a more harmonious society – everyone would know who got what, and if they had more it was because they’d gone out and earned it, not played the system by getting on ‘the sick’ or having sprog after sprog. The problems I foresee are however quite large: 1) Who qualifies? Citizens only? How to identify them? ID cards? If foreign citizens don’t get them, what will we do with the immediate hard cases of kids and families on the streets with no food? This would happen undoubtedly happen. If everyone who has a right to live here gets it, massive incentive for immigrants/bogus asylum seekers right there. 2) Hard cases. Under a CBI many people would get less than they do now, particularly the sick/disabled. Or are disability benefits not abolished? If so, massive incentive to get on the ‘the sick’, even more so than today. 3) The obvious incentive for politicians to try and garner votes by offering to add top-up payments to various favoured sectors of the population. Every hard case that occured (and there would be plenty) would result in demands for either higher payments,or special rates for certain people, or higher taxes, or removal of the CBI from ‘the rich’, and slowly we would be back to square one, with a means tested benefits system, but most likely with considerably higher income tax rates. Its a nice idea, but I really don’t think that its possible to get from here to there politically, and even if we got there we wouldn’t remain there long before everyone wanted to go back to how things are right now. Jim February 9, 2015 at 7:58 pm Basically a percentage of the UK population is no longer capable of standing on its own two feet, managing its income and providing for themselves. Within weeks of this system ever going live there would be starving people on the streets because they had pissed the money up against the wall, and they were unable to earn any more as they were totally unemployable. I would say a good 5-10% of the UK population are incapable of holding down paid employment and thus are never going to have more than the basic payment to subsist on. This is going to result in some pretty ugly scenes in towns and cities across the country – I don’t think the political class have the stomach to let people starve in the streets because they are incapable of looking after themselves. Thats what a CBI means – here’s your money, its not really enough to live on without some topping up, thats all you’re getting til next month, if you run out, tough luck. ukliberty February 9, 2015 at 8:40 pm PF, I agree with you, if they only have that to start with. But how much work? They might be tempted to work just enough to “satisfact”, and which may be less work than if they didn’t have that basic free income. Well, maybe we should trial it and see what happens. Tim links to a paper in the comments on his Register piece that discusses the negative income tax experiments in the USA – no evidence of complete withdrawal from the labour force, no evidence of sufficient work-effort response to threaten the financial viability of a NIT. There was a non-negligible work-effort response, e.g. husbands reducing their hours by about “0.5–4 h per week, 388 20–130 h per year, or 1–4 fulltime weeks per year” (wives and single mothers reduced their hours by more than that). — No-one is arguing that there are no disincentives from getting an income for nowt even if it is ~£70 a week, the argument is about whether it is significant, an acceptable trade-off, and/or even that it might be A Good Thing if, given the lack of remunerative work today for everyone who wants it, if some people reduce their hours leaving more hours for others. There is also the point that the benefits systems in the UK today have additional disincentives to work on top of that £71 for the unemployed because of the various marginal withdrawal rates for individuals and households. There is for example no financial incentive for a 25 year old to do national minimum wage work of 1 to 12 hours because whether he works 0 hours or 12 hours he only gets £71. ukliberty February 9, 2015 at 8:43 pm Jim, Thats what a CBI means – here’s your money, its not really enough to live on without some topping up, thats all you’re getting til next month, if you run out, tough luck. We already have that situation – if you’re unemployed and on JobSeeker’s Allowance the DWP doesn’t give you more money for the week if you pissed away your 70 quid. Jim February 9, 2015 at 9:10 pm @ukliberty: but I’m not talking about those, I’m talking about the ones who currently get more than that via the benefits system (usually via the disability route for mental health issues). Cut them down to £70/week and it’ll be gone on weed and stella by Tuesday and they’ll be starving by Friday. Are we as a society prepared to let people like that starve to death if necessary? If not how can a CBI cope with people like that? And before anyone says I’m making it up, I know someone in exactly this sort of situation – been sectioned multiple times, now on meds and out ‘in the community’. Gets a house, bills paid and enough cash in his pocket to run a car, smoke dope and drink down the pub. Totally unemployable, for his general health issues as well as the mental health ones. Cut him down to £70/week plus a house all in, and he’d be fucked pretty quickly, as he couldn’t budget, or earn any more. Pretty soon he’d have no gas or electric, or food in the cupboard, and no money either. And there’s plenty more like him, sadly. DBC Reed February 9, 2015 at 9:11 pm @Ironman I appreciate the courtesy of your rebuke but I do know what I am talking about. The Green Party does say in its current manifesto, “We believe that states should recover for themselves the power of money creation and not allow it to remain in the hands of private banks”. Martin Wolf headed an article “Strip private banks of their power to create money” on 24th Feb 2014.The Bank of England wrote in its bulletin “Money creation in the modern economy” at a similar time “The majority of money in the modern economy is created by commercial banks making loans”. I give an accurate account of the Douglas scheme of Social Credit. These are facts .If you believe they can be re-arranged to produce a different argument please feel free to do so (0r to adduce some verifiable third-party statements of your own to the contrary) john77 February 9, 2015 at 9:47 pm @ ukliberty Don’t fall over, but I agree with a lot of what you say on this topic. But you understate the disincentives introduced by Brown “There is for example no financial incentive for a 25 year old to do national minimum wage work of 1 to 12 hours because whether he works 0 hours or 12 hours he only gets £71.”. If he works 0 to 12 hours he incurs expenses so his net income is reduced. Currently any unemployed guy with children in my town who got a job in London would need well over £25k to be better off after train fares and loss of tax credits. The Citizens’ income would need to provide enough to live on by the standards of the 1940s and 1950s rather than those of the Joseph Rowntree Foundation who regard many things that my middle-class family did without in my childhood as “basic necessities”. john77 February 9, 2015 at 10:08 pm @ PF “Let’s say you’ve got a partial income, be it P/T / investments / whatever, and you natural instinct may be to do extra work to top income up to a level you regard as satisfactory or adequate. This could easily cover quite large numbers of people.” I’ve got a pension, but my work is interesting and my much younger but bald colleague periodically finds me interesting stuff to do, which provides some extra income for a rainy day (or, while real interest rates are negative, interesting holidays). “If we want to disincentivise people from benefits, then (and promptly takes cover) why not demand some element of work for any benefit taken (with usual short term provisos), be that help to get back into work, and / or which slowly morphs into actual work the longer the benefit is claimed (oe something)? Youth unemployment rate is around 25% in England, over 50% in Spain. There is no point in demanding that people work if there are no jobs! Abolish the NMW, and then there might be some point, but digging holes in the road for someone else to fill in tomorrow is Marxist lunacy. john77 February 9, 2015 at 10:20 pm @ Ironman “Let’s all say what we mean shall we: some people on this blog believe that ANY benefit system (other than perhaps workhouses) is immoral and the recipients underserving. So there is in fact absolutely no replacement system that would be acceptable to them.” Let ME also say that *some* people on this blog think that many exponents of workhouses were immoral (seeking to minimise the cost to themselves as ratepayers of succouring the deserving poor foillowing a poor harvest) and that that many benefit systems are moral and the recipients deserving. Which one of you is willing to denounce the War Widow’s pension (apart from the failure of post-war governments to index-link it) or old age pensions funded from NI Contributions (as they were in my youth before Barbara Castle introduced SERPS) or Industrial Injuries Benefits? Stand up and be condemned. So Much for Subtlety February 9, 2015 at 11:54 pm The question is really whether people would sink to the level of the benefits or they would rise above it. To illustrate the difference, let me just suggest a theoretical alternative – we jail anyone who cannot prove they earn £170 a week. If we give people benefits, then some people will float along on the benefits and no more. At least for a while. The risk is that this becomes the new norm and more people do it even though they could be working. If we start to jail the idle, well, mothers won’t raise their sons to be idle. They won’t allow them to cut school and drink too much. Those that did would be in jail and hence would not be having a lot of children in a hurry. Fecklessness would be bred out of the population. I know neither approach has the slightest chance of being implemented but I am also willing to bet which one will produce the least poverty and dependency after a few generations. john77 February 10, 2015 at 12:09 am @ SMFS Depends on how you define poverty. Any new mother caring properly for her babywill not be earning *any* money while doing so. Also, there’s been a couple of years when I didn’t earn £170 per week at the pre-tax level and we drew down on my savings, so you would send me to jail for that. You are free to imagine my response So Much for Subtlety February 10, 2015 at 12:17 am john77 – “Depends on how you define poverty.” I think you mean it depends on what you mean by fair. We are probably agreed on how we define poverty. “Any new mother caring properly for her babywill not be earning *any* money while doing so.” So it would have the added bonus of encouraging marriage and discouraging single motherhood? An even better policy that I originally thought. “Also, there’s been a couple of years when I didn’t earn £170 per week at the pre-tax level and we drew down on my savings, so you would send me to jail for that.” After a while, most people would have a lot more savings. This doesn’t make you poor. It makes you one of the Deserving Poor. This is a claim to fairness. As you were only temporarily in financial difficulties it wouldn’t be fair to jail you. I agree. I don’t think the policy is perfect, or even implementable, but it would certainly encourage people not to be idle and reliant on savings. Ironman February 10, 2015 at 12:25 am DBC I must apologise Sir. Now that you have quoted the Green manifesto I can see that you know exactly what you are talking about. P.S Do you have any examples where you can go beyond a single line quote and set out your own analysis instead? Ironman February 10, 2015 at 12:29 am John77 “Denounce” the war widow’s pension? You’ll probably not have many takers there. However, the CBI should replace most benefits so…yes, possibly unnecessary. Ironman February 10, 2015 at 12:31 am Can we just get back on track. The basic income would replace the present multi- faceted thing of beauty we presently have. There really hasn’t been a criticism of it that cannot also be labelled with more force at the present system. Jack C February 10, 2015 at 1:39 am The harsh truth is that reforming the system to disincentivise idleness would kill some people, and be very unfair to the those growing up with idle parents. The reward would be in the future, so this would take a monumental act of political will. It’s not impossible though; cars kill plenty, but we accept them. The Thought Gang February 10, 2015 at 10:10 am A few points which I may be repeating (having read the rest of the comments on my phone in various shifts). – There’s no problem with disability benefits. UBI is set at a level to suit someone who doesn’t need additional support. Those who do, can continue to get it. – An important quid-pro-quo (not that lefty UBI fans tend to be on board with it) is the removal of various employment regulations. Make it easier (and potentially cheaper, but workers having more power to be selective might mean higher wages) to employ people, and easier to fire them, and there should be more casual opportunities for people to top up their UBI as and when they would like to. – At the core of it all, as I see it, is the problem that there is never likely to be full employment (without makework, anyway) so given that we have a surplus of labour, and a desire not to see people starve, then why not drop the charade of the benefits system that makes the small number who really have no desire to work (or are truly incapable of holding down useful work) jump through loads of dumb hoops just so that we can maintain the idea that benefits are ‘deserved’. Because we’re paying them whether people ‘deserve’ them or not. – The difficulty is always going to be the level that it’s set at. If it’s below subsistence level then it’s no use. The further above it you get, the less likely people will be to try and top-up – but for all the newspaper bleating about benefits loafers, most people do actually work, even for the shitty wages on offer for lots of them, and even when they’re not hugely better off than they would be on the dole. UBI removes the stigma of being ‘on benefits’, and that *might* mean some of those people are less inclined to work. That’s a risk. So the key is to fight off the lefties insisting that UBI needs to be at (for example) the living wage level (relative poverty blah blah) whilst also fighting off the righties who think it should be no more than the cost of seven days of bread and dripping. Ironman February 10, 2015 at 11:14 am TTG Agree entirely. One other feature is to set the UBI and the ‘target’ tax-neutral income at right levels so that marginal tax rates aren’t too high. For example; £100 UBI and £20 tax neutral income would mean 50% basic rate of tax: too high I would suggest. 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