Bogus arguments about Basic Income

Martin Ravallion has put together several arguments against ‘straw men’ used to criticise Basic Income (he calls it BIG, for Basic Income Guarantee).  The points he particularly tackles are assertions that

  • BIG is too expensive
  • There are better ways to eliminate poverty
  • Targeting is good enough
  • A BIG would destroy work incentives
  • BIG diverts attention from health and education.

Most of his arguments are good ones.  Expense is a matter of how we choose to organise ourselves; targeting doesn’t work; Basic Income is neutral about work incentives.  However, not all the arguments are as strong.

The first problem is his assumption that BIG is there to eliminate poverty; most basic income schemes are providing a limited foundation income, not an adequate one. There are good arguments for considering what Basic Income can do for women, for example, which are about something else.  Ravallion is also right to say that “A BIG should be among the options to be considered by any developing country in a package of antipoverty policies ”  The situation in developed countries is different, in so far as Basic Income is seen as substituting for an existing benefits system.  In the case of the UK Basic Income wouldn’t favour the poor – the effect of eliminating benefits would mean that the Basic Income would exclusively help people who do not currently receive benefits, most of whom are on higher incomes.  Nearly all the schemes I’ve seen leave some poor people worse off.

The second problem is the assumption that what gets paid for education can be treated as part of the income package – it can’t be.  The money spent on BI would have an opportunity cost (as he acknowledges); many of us would like  more to be spent on other things (such as child care, disability benefits, public services, infrastructure, environmental protection) which either favour particular categories of recipient, or can’t be attributed as personal income.

Lots of the objections to Basic Income are ill-founded – there are other “straw men” he might have picked on.    One is the argument that the whole thing is likely to be unexpectedly complicated.  We know from the administration of universal, categorial benefits like Child benefit that it doesn’t need to be.  A second, which overlaps with that, is the accusation that the idea is “untried” – it has been, just not comprehensively. The third is the argument that it would call for a penal rate of taxation.  Taxation is done by convention, some countries have much higher rates of income than others, and income tax is not the only way that governments can raise funds.

Having said all this, there are bogus arguments and straw men being set up in favour of Basic Income, too.  Among them are the arguments that

  • We need Basic Income because there will be no work to do.  There will always be more work to do, and presently we have major shortages of activities that we just aren’t ready to pay for – among them social care, the maintenance of the public environment, security, child care, and many others.
  • There’s no harm in some people living off others.  This is Philippe van Parijs’s argument for supporting ‘surfers’.  It greatly underestimates the capacity for resentment and hostility – especially when people who deny the legitimacy of the community that is funding them use violence and intimidation to impose their values on others. 
  • We won’t need tax thresholds if there’s a Basic Income.  Yes, we will.  Taxing every penny people make threatens to become an administrative nightmare.
  • We won’t need existing benefits if there’s a Basic Income.  Yes, we will.  Benefits don’t just provide people with a basic income.  Among them are income smoothing, housing finance, economic management, support for special needs, and many others.

The “Experiments” that are being tried out won’t, and can’t, settle these issues.  When old age pensions were introduced, it took more than sixty years before we could get a clear idea of the impact on how they had changed people’s lives.  The Scottish experiments should reassure us about practicality, but I’m doubtful that they can tell us much about long-term shifts in behaviour.

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