by Yannick Vanderborght | Aug 1, 2011 | Opinion
India might seem an infertile ground for basic income. For decades, social policy has been about the bureaucratic raj, through which subsidised items have been supposedly supplied directly to ‘the poor’, mainly through ration shops, and where subsidies in general have become deeply ingrained in the society, accounting for over 5% of GDP. However, within the past two years an extraordinary change has occurred. Suddenly, the whole of the political establishment is talking about the desirability or otherwise of “cash transfers” instead of subsidies.
The timing of this new political prominence is fortuitous, since we had been planning a pilot cash transfer scheme since 2008, effectively a basic income pilot, albeit called a ‘universal, unconditional, individual cash transfer’. It had its origins in a seminar in Ahmedabad at the headquarters of the Self-Employed Women’s Association (SEWA) of India, where I laid out the principles of a basic income and reviewed the arguments for universalism against selectivity and targeting, and unconditionality against conditionality. Initially, there was some resistance to the idea that each man and each woman should receive the cash transfer independently. SEWA leaders were inclined to push for it to be paid to women only. To their credit, they eventually agreed that it should be paid to men and women independently, with the children’s cash being given to the mother or principal child-carer. Initially too, some argued for conditionality, but in a subsequent meeting representatives from local SEWA branches came out vehemently against conditionality. This was wonderful.
It took a year to raise funds, during which time a team of researchers and SEWA leaders was formed to plan the work. It was decided to operationalise the pilot in villages in Madhya Pradesh. But as we were planning, another opportunity came up to operate a second smaller pilot in a district of Delhi. This was instigated and supported by the Delhi Government, and the design reflected that. The Delhi pilot involved giving households a ‘choice’ between continuing with the existing PDS ration scheme, based on what are called the BPL (Below Poverty Line) cards that the poor are supposed to possess, and taking a monthly cash transfer instead. Many opted for the cash.
Shortly after this small pilot was launched, local opposition was mobilised, with a street campaign based on a claim that we wished to take away food and other essentials from the poor, currently provided to some people through the BPL cards. This misrepresentation led to riots directed at our team and pressure being put on those residents who had opted to take the basic income cash to revert to the rations. The ration shop owners were involved in this, although the action was led by a so-called Right to Food group.
As of July 2011, the Delhi pilot has been maintained, thanks in part to behind-the-scenes support of the local government and to the courage of local SEWA members. There is even evidence that more residents are wishing to shift to the basic income. We are in the midst of the second round of a monitoring-and-evaluation survey of the impact of the basic transfers. And there has been a request from the Delhi Chief Minister to conduct a second pilot in another area.
Meanwhile, the pace of political debate has been rapid. There has been a press furore, with prominent critics, such as Jean Dreze, claiming those pushing for cash transfers are wishing to dismantle the social state. I have responded to that in several newspaper articles and interviews, and in mid-July addressed the National Advisory Committee responsible for advising the Congress Party leadership, and thus the Government, on social protection policy. I have also given several presentations to UN organisations, including a long seminar that was teleconferenced in seven cities of India.
Meanwhile, the bigger pilot in Madhya Pradesh has moved ahead. We have been doing everything possible to maintain a low profile, which is one reason for my reluctance to present a description to BIEN members. Some of those who oppose cash transfers refuse to accept the legitimacy of pilot tests, and want to disrupt them.
Anyhow, although we certainly do not want any publicity about where the pilot is being conducted, the essence of the methodology and objectives are worth noting, partly because they might be relevant for pilots in other countries.
First, we decided to conduct a variant of a randomised control trial (RCT), in which all residents in 8 villages were to be provided with the basic cash transfer while all residents in 12 similar villages were not. Note that the full randomista model would provide the “treatment” (i.e., cash transfer) to a sample of households selected at random from within each village, to be compared with similar households not provided with the “treatment”. In the case of cash transfers that would be fraught with practical and moral drawbacks. So, we opted to provide the cash transfer to every individual in 8 villages and to none in the 12 ‘control’ villages.
Partly for pragmatic reasons, or funding constraints, and partly because the amount represented about 40% of bare subsistence, the pilot opted to provide each adult with 200 Rupees a month and each child under the age of 14 100 Rupees a month. Again because of funding constraints, it was decided to run the pilot for 12 months, although we had initially planned to do so for 24 months.
In accordance with a long-advocated theoretical position, we designed the experiment with one innovative feature. My perspective – shared by many within BIEN – is that a basic income would work better if combined with existence of ‘basic Voice’, i.e, a collective body able to represent the interests of the vulnerable. After all, particularly in low-income areas, a person with cash is vulnerable to losing it to more powerful individuals or groups unless there is a body able to represent and defend their entitlements.
With this in mind, it was decided to design the RCT experiment so as to compare the outcomes in places where there was no Voice body with those where there was such a body. Fortunately, we had a good way of doing this. For SEWA is operational and embedded in some of the villages and not others. So, from a sampling frame of all ‘SEWA villages’ and a sampling frame of all ‘non-SEWA’ villages in the district selected, we drew a sample of four SEWA and four non-SEWA villages in which the basic cash transfer would be paid.
Once the design principles had been worked out, the first practical phase was the drawing up of a full listing of all households in the 20 villages, not an easy or speedy process. That done, we conducted a comprehensive baseline survey of all households, and launched the cash transfer in the following month. But while that was going on, one further obstacle had to be overcome. It was desirable to control for ‘financial inclusion’, by universalising the way by which individuals received the cash transfer and by ensuring everybody had a bank account. This is a major issue in India today. The majority of the population are ‘unbanked’.
Rolling out bank accounts has been ongoing, with a record of when they were opened being kept for all individuals. For the first two months, the cash transfers were made by direct transfer, with teams from the project going to each village on a designated day. The process has been time-consuming but fortunately without incident. We hope to switch to paying through bank accounts shortly.
While a baseline household and individual survey was conducted, a Community Survey was also conducted to obtain macro-level data. Both the baseline and community surveys will be repeated, with modifications to suit the new period, six months after the start of the pilot, defined as the time of the first cash transfer. These will be called the midline surveys. Then, six months after that the endline surveys will be conducted.
Before the pilot was launched, we drew up a list of hypotheses associated with basic income or cash transfers, all of which are familiar to members of BIEN. We will be testing each of those, and hope to produce a public report and a series of technical papers over the next 18 months.
During that time, we expect the public and political debates in India to evolve dramatically. It is unlikely that the project team will stay out of those debates, even if it wished to do so. The Government has set up an official committee to review basic subsidies and two Food Security Bills are currently the focus of political attention. Numerous economists and other social scientists have taken up positions for or against cash transfers, and no day goes by without at least one newspaper article adding to the debate.
All that can be wished at this stage is that reason will triumph over emotion, and that dispassionate analysis can lead to better social policy. The importance cannot be over-stated. After all, there are more people in India – over 300 million – who are in absolute poverty than in any other country of the world. If a basic income could be part of the way to cut that number drastically, that would be a wonderful contribution. But we must keep our feet on the ground as we grind out the difficult fieldwork and analysis before us.
by Guest Contributor | Jul 25, 2011 | Opinion
By Kelly Ernst
Open a newspaper and you are likely to read that the Canadian economy is ramping up. Oil is up, the dollar is up, and employment is up. Yet on the streets we hear that things have not changed substantially for many people and for a very long time.
Statistics Canada data confirm that the highest-income people are earning more, while lower-income Canadians are not faring better. So where is the debate on new policy initiatives that could reverse such disparity across the income spectrum?
Growing disparity
It is easy to find reports of economic well-being but the fact remains that economic disparity is growing at a worrisome rate.
The Organisation for Economic Co-operation and Development (OECD) has pointed toward Canada as an example where “the rich have been getting richer leaving both middle and poorer income classes behind … Canada spends less on cash benefits such as unemployment benefits and family benefits … as a result, taxes and transfers do not reduce inequality by as much as in many other countries.”
Consequently, up to 14 percent of Canadians now live in poverty. Even in wealthy Calgary the working poor now number as many as 140,000 people.
The reports about how well our society is doing economically ignore the reality of the many people who are falling farther and farther away from those with wealth.
What’s wrong with income disparity?
To say that economic disparity is bad for all of us, not just the poor, is not particularly revolutionary. Richard Wilkinson and Kate Pickett, in their book The Spirit Level, bring together a wide variety of evidence showing that countries with greater disparity have lower life expectancy, higher teenage pregnancies, higher infant mortality rates, higher rates of crime and homicides, greater imprisonment rates, and lower social mobility. The conclusion seems unavoidable: we ought to be tackling growing disparity to eliminate the harm it causes to all of us.
Back to basics
One policy worth considering is a guaranteed basic income level for all citizens. Although there are many approaches, a guaranteed annual income (GAI), has been described as a promising method.
A GAI provides enough income to ensure families can pay for their basic needs, such as housing, food, clothing, and transportation, without needing expensive government supports to monitor it. Senator Hugh Segal has argued that a negative income tax program could be used to deliver the GAI. For those who file taxes and earn below a particular threshold a grant would be delivered to them. This would phase out as they begin earning self-sustaining incomes. If unconditionally applied to all citizens, it might eliminate much of the poverty in Canada as well as the discrimination in adjudicating the “deserving” and the “undeserving” poor.
Segal suggests that GAI would reduce many costly provincial and municipal support programs (such as welfare, employment insurance, food banks, homeless shelters, and many health services) that are currently used to address poverty. Because it would be universally applied through tax returns, the GAI eliminates the need for monitoring elaborate qualifying rules. It attacks core poverty without needing swarms of additional bureaucrats and may well result in a diminished bureaucracy.
Canadian evidence
Recent studies by Evelyn Forget based on evidence accumulated from a basic income trial in Manitoba in the 1980s suggest that a minimum income program leads to greater levels of post-secondary education plus fewer health and other costs associated with poverty. Rather than acting as a disincentive for people to find work – a criticism often leveled against a guaranteed income – the Manitoba trial showed that the program provided opportunity for people to upgrade their education and opened new employment opportunities to them.
Canada currently offers a minimum Guaranteed Income Supplement (GIS) to seniors with low incomes. The GIS is often cited as a policy success because it keeps many seniors out of poverty who would otherwise experience extreme hardship. Similar programs have been suggested for people with disabilities, students, or single women with children pursuing educational upgrades.
Contrary to critics of a basic income policy who suggest it would be prohibitively expensive, its implementation may be quite affordable – especially in comparison to funds expended on recent economic stimulus. For example, Canada spent $47 billion in 2009-10 on stimulus infrastructure spending. This is five times more than the $8.3 billion spent in 2010 on GIS for 1.6 million seniors. We spent substantially less on direct supports for people entering the work force: $1.3 billion for approximately half a million people accessing student loans and grants.
The billions spent on infrastructure rather than expanding Canada’s existing GIS was a conscious policy decision in response to the economic downturn. The main impediment to helping the poorest Canadians climb out of poverty is not that a basic income policy would be unaffordable but that we lack the political will to consider such a solution.
Policymakers should consider basic income benefits
Consider a GAI applied to students in postsecondary education. If we supported low-income students through school, they could complete their education debt-free similar to how many higher-income Canadians now complete their education. A GAI would allow access to education for diverse groups of people who are least able to afford it, simultaneously help to reduce economic disparity by improving their employment prospects, and reduce governmental costs associated with student granting programs.
A GAI could give the opportunity to students to invest savings immediately upon entering the workforce and foster compounded wealth accumulation both individually and on a macro scale. Such early investment by young people could significantly reduce the need to pay seniors’ pensions later in life.
This is only one example of how a basic income policy might help encourage people to sustain themselves, reduce the cost of poverty to taxpayers, and simultaneously reverse the societal impacts of deepening disparity.
Without serious discussion of economic disparity, its consequences, and possible solutions, we will never determine how to mitigate poverty’s deleterious effects to all of us. If we think economic disparity ought to be addressed, then we have an ethical obligation to ask our policymakers how they plan to do it.
Kelly Ernst is Senior Program Director at the Calgary-based Sheldon Chumir Foundation for Ethics in Leadership.
by Guest Contributor | Jul 18, 2011 | Opinion
By Janet Keeping
I often wonder why concern about poverty in Canada is not more intense and widespread.
Are Canadians really as indifferent as we seem? Or is some of the failure to react a function of ignorance? Certainly many people seem not to appreciate that there is acute poverty in Canada.
For example, in Calgary – one of the wealthiest cities in Canada – over 100,000 people, or about 10 percent of the population use food banks annually. This fact is not widely known, even in Calgary, although it is publicized from time to time in the media.
As an aside, I note that ignorance itself has ethical dimensions. As good citizens we should keep ourselves apprised of what is going on in our community, especially what is going on with our society’s most vulnerable members. Ignorance may be bliss, as the old saying goes, but it isn’t ethically defensible.
In any event, ignorance can’t entirely explain the failure of Canadians to react to the poverty in our midst. There is more to our apparent apathy about poverty; namely a profound failure of imagination. Knowing something – such as that many Canadians are poor – is one thing. Understanding the significance of being poor is quite another. If you can’t picture the suffering, you aren’t going to appreciate the imperative to help.
When told the people were starving for want of bread, Marie Antoinette – the last Queen of France – famously replied “Well, then, let them eat cake.” The phrase “let them eat cake” has become synonymous with a callous disregard for the lot of the (much) less fortunate.
But the anecdote also connotes an inability to picture how life goes for people in very different circumstances from yours. If Marie Antoinette’s bread supply had ever been low, there would have been many other foodstuffs to keep hunger at bay, primary amongst them cake. This wasn’t true for the masses.
In contemporary Canada the demeaning grind of poverty looks very different than it did in 18th century France, but poverty remains dispiriting and painful.
It looks like the parent who has always to say “no” to a child’s desire for what others all around have. It looks like the degradation of having to tell your child’s principal that you can’t afford the school trip and ask if a subsidy is available, and like the guilt of feeding your family what you can afford rather than the more nutritious foods you know they need to thrive. And if your poverty is caused by being out of work, then it looks like the agony of knowing you are providing a poor role-model and as a result the cycle of poverty may well be repeated in your child’s adult years.
Canadians have to have the relevant information – that there is significant poverty in our country – and they have to have some way into understanding what it means. Only with that kind of understanding will we insist that collectively – through public policy reform – we address the issue in a robust way.
The precise policy solution to poverty is not our concern here. It is instead: how do we get to the point that the suffering around us caused by poverty becomes intolerable and we insist upon action?
Our failure to reach that level of motivation is even more disconcerting now that the gap between rich and poor is growing in Canada (as it is in many countries). There is ever stronger evidence of the connection between that gap and the incidence of serious social ills, such as teenage pregnancy, lower life expectancy and crime.
A growing body of evidence suggests that the bigger the income gap in any society, the worse the conditions for everyone in that society, not just the relatively poor. So even if you are not moved by the injustice of poverty and the stressful unhappiness it causes, you should be stirred to action by your own self-interest. Yet many people remain indifferent. So, what is going on here? I think it is this: we do not see our interconnectedness.
The notion that our individual well-being is strongly connected to the well-being of the broader society flies in the face of one of the strongest myths of our place and time: that you make it or don’t almost exclusively on the strength of your own effort.
We persist in believing we are personally responsible for our poverty or wealth, as though what is going on around us has no relevance. Increasingly it looks like this is far from the whole story and in important ways simply not true.
Greater knowledge, imagination and understanding of our interconnectedness seem needed to spur an ethical response to poverty alleviation.
Janet Keeping is President of the Calgary-based Sheldon Chumir Foundation for Ethics in Leadership.
by Guest Contributor | Jul 3, 2011 | Opinion
SMITH, Jeffery J.President,
Forum on Geonomics
jjs@geonomics.org;www.progress.org
Land Rights course: www.course.earthrights.net
Share Earth’s worth to prosper and conserve.
“This Land is Our Land” is a recent video (2010) subtitled, “The Fight to Reclaim the Commons” and was previously titled “Silent Theft”. It’s by author David Bollier (Senior Fellow at the Norman Lear Center at the USC Annenberg School for Communication); it’s available from the Media Education Foundation.
Featured speaker Bollier cites a new international movement that is trying to reclaim our commons by modeling practical alternatives to the restrictive monopoly powers of corporate elites. Given the overlap in values and goals, perhaps advocates for commons could be natural allies of BIGists.
A leading figure in this movement steeped in democratic principles, Bollier places the commons within the American tradition of community engagement – such as good ol’ barn-building by a work party of friends and neighbors – and the free exchange of ideas and information; he could have cited Ben Franklin, man of many inventions, who did not believe in patenting a thing (although the absence of patents and copyrights cost dividendist Tom Paine a fortune).
Bollier shows how commercial interests are undermining our collective interests; for more than three decades, transnational corporations have been busy buying up what used to be known as the commons — everything from our forests and our oceans to our broadcast airwaves and our most important intellectual and cultural works. He bucks the rising tide of anti-government extremism and “free” market ideology.
To see the whole video, click here:
https://www.mediaed.org/cgi-bin/commerce.cgi?preadd=action&key=146
If you’ve not thought much about your heritage and the now-absent commons, Bollier’s film will be informative. But be forewarned: it perpetuates the stereotypes of rich vs. the rest, business vs. the rest, right vs. left, commons vs. market (which is actually part of the commons), as if reality is only black and white.
Of course, the rich, the right, the corporations do commit atrocities, but so do the poor, the left, and governments. Indeed, now in Africa and Central Asia, the biggest land-grabbers are governments such as those of China and Saudi Arabia. And while markets might not be ideal tools for distribution, they are quite useful for efficient and sufficient production. Let’s use them for what they are, not blame them for what they are not.
Bollier’s is a common (no pun intended) mistake, but mistake it is. There is no good reason for one promoting a third way – which the commons approach could be – to take sides. By alienating the people comfortable with freedom, he hampers progress toward justice. The people who’re wary of government and long to live free of oppression are many millions (see North Africa) – many more than the few propagandists and apologists for the current system of crony capitalism. Bollier might benefit by vacating his ivory tower long enough to get his hands dirty and rub elbows with ordinary folk fighting corruption in most countries on the planet.
The other main problem with Bollier and his colleagues is that they either don’t see or are too cautious to mention the most relevant part of the commons – the commonwealth. You’re human and you know how humans are: to us, money matters, even matters more than nature or the environment, never mind any commons. Caution is not persuasive to people open to change, the ones who must support proposals for stewardship or a Citizens Dividend or basic income; it comes across as cowardice at worst and uninspiring at best.
The real issue is not ownership, whether holding some land individually or as a group. The real issue is: who gets the profit – the rent, the immense flow of money that society spends for nature. You might own land with a house on it, but it requires you to make mortgage payments to lenders. Your government might own an oil field but in America when oil companies don’t pay the agreed upon royalties, the US Government turns a totally blind eye. No, it’s not who holds title, it’s who gets the rent.
Rent dwarfs wages and interests. It’s our spending for surface land, buried resources, spectral airwaves, ecosystem services, and those government-granted privileges such as corporate charters, utility franchises, copyrights/patents, and bankers’ sovereignty. In any economy it is so much money that if society shared it, one’s monthly dividend check, deposited into one’s bank account, would easily be enough to constitute a basic income (to cover the costs of the basics: rudimentary housing, a non-packaged diet, non-label clothing, a metro pass, and medical insurance).
Ironically, if Bollier were bold enough to mention the commonwealth, then a vast majority would pull for sparing the environment. Presently, too many people see the false dichotomy of income vs. environment as true. Actually, there are feasible technical solutions to almost all environmental challenges. Society does not use them, is ignorant of them, due to the entrenched power of present rentiers, the few who siphon off most of society’s spending for land and oil, other natural resources, and government-granted privileges. But share that rental flow, and people would become secure enough to think straight. A critical mass would see that the healthier the planet, the higher its locational values, and the fatter one’s social dividend.
Recover that fat flow with land dues and other dues and fees and you can abolish taxes. Share the recovered public revenue and you can abolish subsidies such as corporate welfare. To win your fair share of Earth’s worth, maybe it would help some to talk about ownership and commons, but you’ll do the most good by touting geonomics and an equal extra income to all.
by Citizens' Income Trust | Jun 28, 2011 | Opinion
Looking at progress against the pillars of the Beveridge welfare state: health, housing and education, many commentators have identified housing as the ‘wobbly pillar’, starved of investment or ineffectively maintained. With this being said, an article titled retired homeowners see wealth increase shows a step in the right direction when it comes to elderly homeowners profiting from the ownership of a property. This is possibly a reason as to why many people are so eager to become homeowners earlier on in life.
The forthcoming UK Housing Review will show that the past two years has seen the highest sustained investment in social housing in the last three decades. 1 However, with 4.5m on housing registers and affordability ratios extending beyond the average there is a clear and pressing need for change.
The Hills Review into the future of social housing (2007) underlined that while there is a wide range of ways of supporting better housing provision, Britain has traditionally focused on three ways of providing housing support: the provision of social housing at affordable, sub-market rents; means-tested Housing Benefit; and tax benefits for owner-occupiers. 2
The proportion of total welfare bill taken up by housing has increased considerably over recent years, and reform has been slow. The coalition government entered power with a commitment to reducing the welfare bill. The Emergency Budget of June 2010, the Spending Review, and consultation on the creation of the Universal Credit, have ushered in a dramatic and wide scale reform of Housing Benefit. This is an appropriate time for those interested in a Citizen’s Income to consider these changes and to ask where housing best fits with a Citizen’s Income.
Housing Benefit
Housing Benefit (HB) is means-tested and directly supports people’s real housing costs. As such it is already targeted at those most in need. Housing Benefit is available to those in work and to those out of work, and so it should, if effective, form an important part of a range of incentives and nudges to move off other out-of-work benefits and into employment.
Of the 4.7m households that claim Housing Benefit, 76% are retired or not expected to work due to illness, disability, or caring commitments. The remaining 24% of claimants are of working age and expected to work, with 540,000 (50%) in employment. It is estimated that around half of employed households who would be eligible for Housing Benefit do not claim. 3
Debates over the reform of Housing Benefit are many and varied. However, it is feasible to summarise two broad issues of interest to supporters of a Citizen’s Income:
- Increasing costs to the public purse, because of pressure in the UK housing market and concerns that a system that allows for payment of up to 100% of unregulated private market rents creates an incentive for landlords to maximise rental return from HB claimants and a lack of incentives for HB claimants in the private sector to seek suitable accommodation and lower rents. The Government’s analysis is that, without reform, expenditure is expected to rise to £24bn by 2014/15. 4
- The high taper rate of HB contributes to the poverty trap and means that recipients have few incentives to find work. Housing Benefit has a taper rate of 65% which is applied to income above the applicable amount. The Housing Benefit and Council Tax benefit taper rates are additive, so the marginal deduction rate faced by a claimant in receipt of both Housing Benefit and Council Tax benefit is 85%, so net incomes rise in very small proportion to gross earnings. In his report on the future of social housing, John Hills used the example of a couple with two children, paying a rent of £120 per week. In this case, the household would gain only £23 a week from an increase in earnings from £100 to £400 per week. 5
Reforms in the last two decades, like the introduction of Choice Based Lettings for social housing, and the creation of the Local Housing Allowance for those receiving Housing Benefit in the private sector, have put a greater emphasis on Housing Benefit as a system which encourages and supports its recipients to make more active choices from the options that they face.
Since the budget in June 2010, the coalition Government has announced a number of significant reforms to Housing Benefit:
- Local Housing Allowance rates will be set at the 30th percentile of rents in each Broad Rental Market Area rather than the median rate, meaning that tenants will only be able to claim rent for the cheapest 30% of properties in the local area.
- Extending to 35 the age below which single people can only claim HB for a room in a shared house. Currently the single room rate is limited to people 25 and under.
- Increases in non-dependents’ deductions over a three year period from April 2011.
- Tenants who have claimed JSA for more than one year will lose 10% of their HB entitlement from April 2013.
- Government intends to limit claims of HB of working age people to the size of accommodation they are deemed to need. More detail on this is expected in the coming year.
- Housing Benefit will be reduced by the Government’s proposed total benefits cap, projected to be £26,000 per year ( £500 per week) by 2013.
Housing and the Universal Credit
Unifying current benefits for working and non-working households to create a single Universal Credit will help to simplify the system, but, critically, the focus of the Universal Credit is to improve the incentive to work by making work pay through creating a single integrated taper which will withdraw support more gradually as earnings rise. As the analysis of the white paper in the last Citizen’s Income Newsletter made clear, the Universal Credit will provide a simplified structure designed to cover a range of needs. The credit will be an integrated working age welfare payment for a basic personal living allowance with additional elements for households with children, people with disabilities or caring responsibilities, and housing costs. As well as replacing Income Support and Income Related Employment Support Allowance, and Working and Child Tax Credits, it will also include Housing Benefit.
The White Paper states that an appropriate amount will be added to the Universal Credit to meet the cost of rent or mortgage interest. If you are looking for mortgage brokers or advice on mortgages, visit Freedom Advice. A number of supporters of greater simplification and streamlining of benefits may view this as a fudged compromise, but this addition is potentially an important commitment to retain a link between benefits and the actual rent charged to individuals.
A system that does not take into account the real costs of housing could leave existing tenants unable to keep up rent payments and leave social housing providers unable to build new homes. To date, a reliable income stream of Housing Benefits has allowed independent housing associations to secure long-term loan finance at reasonable rates, such as a bridging loan, that has enabled them to build affordable, social, supported and specialist homes. Homes that neither the market nor local authorities have been able build, and tenants can afford them as well.
The actual impact of the Universal Credit on housing will only become clear as details are agreed. However, as the Universal Credit will assist mortgage interest costs as well as rents, it will help the welfare system to be more tenure neutral. However, individuals and families getting help with housing costs will have their earnings disregard reduced by a multiple of 1.5 times the eligible costs, down to the floor of minimum earning disregards for those with higher levels of housing costs. This will mean that the higher the household’s housing costs the less positive the financial incentives of the scheme.
The proposals for the Universal Credit are focused on people of working age and the upper limit for the Universal Credit will be the age of eligibility for Pension Credit. However, the Government is planning to change Pension Credit to provide support for rents and to add a further element to provide income-related support for pensioners with dependent children.
Housing Benefit and the Citizens Income
Due to the inefficiencies and structural problems within the UK housing market, dedicated support with housing to meet the real costs of rents and mortgages is needed. There are a number of possible responses that a CI might make to the Housing Benefit debate, which may be worthy of further exploration. To get the conversation started, here are three deliberately simplistic responses which in practice are not mutually exclusive:
- Leave it alone: Housing remains outside the CI as a payment to households rather than individuals.
- Bring it together: Look at the opportunities of a CI alongside a Universal Credit which would include a simplified, tenure neutral approach to housing costs. The interaction of a Universal Credit with a CI could offer a radical simplification of housing support making the system transparent, accountable and simpler to run. This approach would lead us to look at policy approaches and delivery mechanisms that will help support this in an era where central government is keen to see more localised leadership and reduced costs, such as authorities grouping together to provide streamlined and shared benefits services.
- Look wider: Rather than asking a technical question about how approaches to specific benefits might sit together, supporters of a CI could ask what we need a housing policy to do in order to help deliver the CI’s outcomes: redistribution of income, poverty reduction, clearer incentives to work and participate in society, and greater choice, control and autonomy for citizens in the housing market. This might focus on policies to improve the supply of social housing and ways to deliver more mixed communities through a variety of low cost home ownership options, as well as looking at the role of the private rented sector and asking what regulation and approach might be required.
Notes
1. https://www.cih.org/publications/downloads/ukhr.htm
2. Hills, John (2007) Ends and means: the future roles of social housing in England. Centre for Analysis of Social Exclusion, London School of Economics and Political Science, London, UK
3. National Housing Federation, Responsible Choices for a Fairer Future, July 2010.
4. The Rt Hon Iain Duncan Smith, Secretary of State for Work and Pensions, Speech to Institute for Public Policy Research, Tuesday 7 December 2010
5. Hills, John (2007) Ends and means: the future roles of social housing in England. Centre for Analysis of Social Exclusion, London School of Economics and Political Science, London, UK
by Michael Lewis | Jun 20, 2011 | Opinion
By Michael A. Lewis, Associate Professor
The Silberman School of Social Work at Hunter College
After spending 15 years teaching about, writing about, and observing the U.S. welfare state, I believe that the policies that make it up are based on a questionable assumption. In general, U.S. residents think that there are two kinds of people who receive social welfare benefits—those who deserve them and those who don’t. This is sometimes stated as a difference between the deserving and undeserving poor but it goes beyond poverty. The deserving are those who are in need through no fault of their own, while the undeserving are those who are in need because of “bad” decisions they have made. Perhaps they chose not to work enough, to have a child too early and/or outside of marriage, not to finish school, etc. The key to becoming a member of the deserving group is to be a working person, someone who has worked, or someone who is thought unable to work. Here “work” is used to mean someone working for a wage in the “above ground” economy. For those who distinguish between the deserving and the undeserving this is the only kind of work that counts. Taking care of one’s kids or other worthwhile things people can be doing instead of working for a wage simply don’t “cut it.”
Those who are working, have worked, or are unable to work, have the earned income tax credit, social security, and unemployment insurance. The most infamous program for the undeserving is Temporary Assistance for Needy Families (TANF but more commonly called “welfare”). TANF recipients are usually single non-working mothers and typically receive less than recipients of unemployment and social security. TANF recipients are also subjected to a work requirement in order to continue receiving benefits. This requirement means that they have to do some type of work in order to receive benefits. Those who don’t may have their benefits reduced or eliminated. It would be laughable for someone to propose that recipients of social security be required to work in return for their benefits. This is because, so the reasoning would go, they already worked for them back when they were “going to work every day” and “paying into the system.” Even though many in the U.S. seem wedded to the idea that there are deserving and undeserving recipients of social welfare benefits, I think this idea may be way too simplistic.
To see what I mean, consider the stereotypical “lazy” welfare mother. She is poor and needs “welfare” because she has chosen not to work and, because of this choice, doesn’t really deserve assistance. Perhaps we should support her for the sake of her children or simply to be “charitable” but, morally, she has no right to help. I think this view may be wrongheaded for reasons that will soon become clear.
As I understand it, geneticists believe that any observable trait that differs among people can be valid to study genetically, including behavioral traits. They also believe that complex observable traits result from a complicated interaction of genes with other genes and with the environment. They don’t claim to understand these interactions completely but think that what’s going on is that the effects of some genes depend on other genes as well as the environment and that the effect of the environment depends on genes.
As some readers may be aware, there is currently a controversial area of genetics called, behavioral genetics, that focuses on how genes and environment interact to affect behavior, including human behavior. Based on having read some of this work, I think that those working in this field regard human behaviors, such as the choices we make, as complex traits. If choices make up a pattern that some would call laziness, I think this laziness would be regarded as a complex trait too. The problem for the deserving/undeserving distinction is that people don’t choose their genes nor do they choose their environments, at least not completely. This is why it is such a complex process in learning how to analyze social behavior when you have to consider all of these different factors.
I’m the father of a young daughter, half of whose genes came from her mother and half from me, but this is not something she chose. All of her life we’ve chosen the environments she’s spent time in. Since she is still pretty young, this will still be the case for a few years to come. Even as she starts playing more of a role in deciding where she’ll spend her time, the interaction among her genes and between her genes and our earlier environmental choices for her may affect these “choices” too. What I’ve said about my daughter, of course, applies to all of us, whether we are “hard working” or “lazy”.
If genes and environment interact to affect human behaviors, including “laziness,” then the problem it raises for the deserving/undeserving distinction should be clear. In a sense the mother on welfare who has chosen not to work hasn’t really chosen not to work at all. She hasn’t chosen her genes, she hasn’t chosen much of her environment, and she hasn’t chosen how these interact to help create her “laziness.” So is it really fair to deny her the help she needs, on moral grounds, because she has “chosen” not work?
What I’m saying here might be troubling for several reasons. Some might think my argument is similar to the long held view that the average black is not as smart as the average white and that this difference is due, in part, to genetic differences between these two “races.” This is not the case at all. The racial difference in smartness argument is an argument about genes helping to explain differences between groups. What I’m saying is that interactions among genes and between genes and environment may explain differences within a group, where that group is the entire human race. To say that genes and environment interact to affect human behavior doesn’t mean that supposed differences between blacks and whites are partly due to racial differences in genes. An example should help make this clear.
Suppose that blacks and whites differ, on average, for a trait and that genes and environment interact to affect this trait. It’s logically possible for this to be true and for blacks and whites to have identical genes. This is because even though they have identical genes blacks and whites may, on average, have grown up in very different environments. The interaction of identical genes with different environments may be what explains the racial difference in the trait.
Others might be bothered by what I’m saying because they view the idea that human behavior may be influenced by genes as very suspicious. They might say that human behavior is caused mainly by social factors, especially oppressive ones. To this I would say that it is hard to read the work of geneticists and come away believing that genes play almost no role in influencing human behavior—there just seems to be too much evidence that suggests the possibility of such influence. Also, to say that genes may influence behavior is not to say that the environment, even an oppressive one, doesn’t. Remember that what I’m saying is that genes interact with the environment to influence our behaviors. Part of that environment may be racist, sexist, homophobic, neighborhoods ignored by investors and other powers that be, “crappy” schools, lacking in employment opportunities, etc. All I’m saying is that these kinds of environmental factors may interact with our genes to result in certain behaviors being more likely than others.
Still others might have problems with what I’m saying because they believe it means that people cannot be held accountable for their bad decisions. If people make such decisions because of their genes and environments and they have no control over these, how can we hold them responsible for their choices? I have to admit that this even troubles me, especially when one leaves social welfare policy and considers criminal justice. But if behaviors differ among human beings, if behaviors are examples of complex traits, if all such traits are influenced by genes and environment, and if we don’t completely choose our genes or environments then it’s very hard to see how we can fairly be held completely responsible for our “choices,” good or bad.
What does all this mean for social welfare policy? The main thing we should do is stop trying to make policy decisions based on who is deserving of help. Instead of trying to figure out if people are deserving of help we should simply try to figure what they need and how to provide it. If people need housing, how do we get them that? If they need food, how do we get them that? The question “do they need food or housing because they’ve made bad choices and don’t deserve help?” should be seen as irrelevant, since it is so hard to separate the choices they’ve made from the ones that were made for them. Yet we should be careful. Even as we focus less on whether people deserve help, that doesn’t mean that we shouldn’t still care about incentives.
Incentives may be very important parts of our environments that interact with our genes and other parts of the environment to influence our behavior. Thus, whether a policy might result in people working less, spending a longer time looking for a job, family “break-up”, etc. could still be relevant questions to ask. The point is that these questions can be asked and policies based on our best guess answers to them can be proposed without blaming people for their bad choices. A policy that is “in the spirit” of what I have in mind is the basic income (BI).
BI is a proposal that for many would be a better way to deal with poverty than we do now, at least in the U.S. It would set a minimum income in the sense that no one’s income would be allowed to fall below that minimum, whether or not they worked. Those who did work would pay a tax on their earnings but the tax would be set so that those working would always have a net income higher than those who stayed home and lived only on the BI. If it were possible to get this minimum income high enough, poverty could be better dealt with and people would still have a clear incentive to work. Doing both of these things together is how BI considers the incentive to work without also withholding help from people in need because of their “bad” choices. I think that the more we can move toward policies like BI, the better off we’ll be. Such policies would allow us to go beyond the terribly outdated practice of trying to distinguish between the deserving and undeserving poor.
Acknowledgements
Thanks to Carole Schiffman, Steven Strogatz, Eri Noguchi, Jennifer Waldman-Green, Joel Blau, Mimi Abramovitz, and Yuko Kawanishi for their helpful comments and suggestions.
Credit picture: CC Gino Zahnd
