More on the Citizens Income – a quick update

Since I wrote about it here in December there have been quite a few developments in the debates on an unconditional citizens income in the UK. These were partly triggered by an unfortunate television interview with Green Party leader Natalie Bennett on Sunday Politics, in which, when aggressively questioned by Andrew Neil,  she failed to provide a convincing argument that it was affordable. Subsequently, Green MP Caroline Lucas, who was also grilled about this on the Radio 4 Today Programme, stepped onto the back foot, saying that although the Green Party was still committed to this demand it would not be in their election manifesto.

A lot of the damage was done by an article in the Guardian by Patrick Wintour, misleadingly stating that ‘The Citizen’s Income Trust (CIT), which has given advice to the Green party and been repeatedly cited by the Greens, has modelled its scheme and discovered it would mean 35.15% of households would be losers, with many of the biggest losers among the poorest households.’

The model referred to here is Euromod, a tax-benefit microsimulation model developed by Holly Sutherland at the University of Essex. Like all such models, the results it produces depend on what assumptions you feed in in the first place.  Whilst it is perfectly true that some early attempts to model the impact of the Green Party’s proposed Citizens Income did produce results that showed that some poor households could be net losers, more recent studies, like this one, based on more sophisticated assumptions, have been done that show conclusively that, in the words of Malcolm Torry:

It is perfectly feasible to implement a Citizen’s Income of £72 per week for every adult, with lower amounts for children and young people, and higher amounts for pensioners, by reducing to zero the personal tax allowance, abolishing higher rate tax relief on pension contributions, and taking households’ Citizen’s Incomes into account in the same way as other income is taken into account when their means-tested benefits were calculated. This scheme would be revenue neutral, it would impose no losses at the point of implementation on low-earning households, and it would impose few losses on all households. All means-tested payments would be substantially reduced, every household would experience much lower marginal deduction rates or current MDRs on much reduced earnings ranges and then reduced MDRs on the rest, and about half of all households currently on working tax credits would be floated off them.

There is, however, a larger and more important point to be made here. And this is the insistence in all the media discussion that any innovation has to be ‘revenue neutral’. This is the default assumption adopted by any journalist interviewing any politician about any demand. Each change has to be justified on its own merits, independent of any other change, on the assumption that all other things remain the same, in a kind of parody of the experimental method.

In reality, of course, any new government would introduce a whole range of changes, all of which would interact with each other. Inevitably, microsimulation models like Euromod, are better able to deal with ‘givens’ that are clearly set out in government policy (such as tax and benefit rates) than with changes arising in the market (such as changes in wage levels, prices or unemployment levels) and cannot hope to model the full complexity of these interactions. Any government that came to power wishing to introduce a citizens income would undoubtedly also want to make other changes, such as raising the minimum wage, changing the rates of income tax, creating some extra taxes, abolishing others and so on. These would radically alter the sums, as, of course, would changes in employment levels related to the dynamics of the world economy. But even leaving these points aside, it is clear that a government committed to redistribution would not find itself short of resources to redistribute (just look at the tax evasion by HSBC customers currently being uncovered).

Such considerations did not feature in the debates following the debacle of the Bennett Sunday Politics interview. In fact several commentators seemed to grab the wrong end of the stick in ways that, perhaps unconsciously, seem willfully counter-intuitive.

Here, for example, is  Zbigniew Tycienski (blogging as ‘Tychy’) gleefully reflecting on Bennett’s ‘car crash’ interview, in a post called ‘A flagship sunk’.  He quotes my earlier post on Citizens Income (the part where I say that, given the choice, some people might like to ‘live on very little and devote your life to art, music, prayer, blogging, archaeology, chasing an elusive scientific concept, conserving rare plants or charitable work’) and describes this as ‘anti-social’.  What an extraordinary conception of society this is!  In his view it is anti-social to contribute to the general cultural, spiritual and scientific good of humankind, but, presumably, not at all anti-social to devote your life to competition, the acquisition of material goods and the pollution of the planet with the resulting detritus. Thus has the neo-liberal logic been absorbed and internalised and become part of a grotesque new Orwellian common sense in which the common good has become the common bad.

The more I hear arguments like that, the more committed I feel to the need to challenge these inside-out ethics. The question is, how?

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One Response to More on the Citizens Income – a quick update

  1. kenpalm says:

    Hi Ursula.

    Not only is it nessesary to address the inside out ethics, it is nessesary to address the inside out economics. For right at the heart of the objection you so rightly make of the criticism of BGI that we are now hearing again is the idea of all policy has to be “Revenue neutral”.

    What is meant of course is the bland acceptance of the Thatcherite dogma that ” The only monies available to Government comes either from taxation or borrowing” This is not, and never has been true.

    Any and every sovereighn state has the power, and the duty, to supply its citizens with a suficient and interest free money supply. That we choose to BORROW at interest what we have need of is a long standing scandal, leading to most of the serous problems that we are now saddled with.

    A BGI is the ideal means for an enlightened State to issue this amount into circulation, limited only by our ability to produce goods and services that need monetising.

    Of course the powerful beneficiaries of the existing corrupt system will use all of their power to prevent discussion of anything other than this “Revenue neutral” model.

    Thank you for raising the issue.

    Ken.

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