Some problems with Basic Income schemes, and how to fix them

Ian Gough has condemned Basic Income schemes as ‘deluded and diversionary.’  I’ve been working over the last couple of weeks on a paper looking at these schemes.  The arguments are more detailed than I can conveniently put in a blog, but in a nutshell I can see five key problems with current proposals:

  • Resources cannot effectively be transferred from other benefits in the way that schemes envisage.  The objections are partly distributive, and partly related to the criteria by which existing benefits are distributed.
  • The issue of housing, and Housing Benefit, cannot be set aside.
  • The models applied to personal taxation and National Insurance are not viable.
  • The costs are primarily directed at people of working age and higher incomes, who have the lowest priority.
  • The costs are massive.

I do not think I can offer direct solutions to these problems, but I have identified some approaches that could at least help to lessen their impact. In particular,

  • Basic Income could be accepted as a partial income, rather than an all-encompassing solution.
  • It needs to be developed in tandem with directly provided services, not just income.
  • Personal taxation can be integrated with parts of benefit delivery; National Insurance could be the basis of a different kind of scheme.
  • Direct costs can be reduced through alternative methods of delivery.

That leaves the problem of the scheme’s distributive impact.  Some of the proposals begin by taking money away from people in need.  The reason for doing this is built in to the idea, but even if the poorest are protected, any scheme designed to extend income support to people on higher incomes has to start by directing resources to those people.  To pay for the scheme, and to make it operate fairly, there has to be some way to claw those payments back.  That cannot be avoided; it is the price of introducing a Basic Income for everyone.

I’m not going to put up the paper at this stage, but if anyone would like to see the draft, I’d be grateful for comments; please email me.

3 comments

  1. Stephen McKay

    Two weeks ago Charles Murray was also back on the basic income theme — http://www.wsj.com/articles/a-guaranteed-income-for-every-american-1464969586 . As with some other recent commentators, this time around a new-ish theme is that of major job loss owing to robots and artificial intelligence, which of course is far from proven.

    I’m not sure what is planned by way of evaluating the scheme operating in a number of Dutch cities, but some kind of empirical evidence on effects might be helpful.

  2. John Veit-Wilson

    You could point out that Child Benefit for every child is a very good basic income scheme. We know it works. If it were paid at ‘Minimum Income Standard’ average costs, it would greatly improve the chances of overcoming child poverty in the UK and relieve many other social evils currently associated with family poverty, in or out of work.

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