Podcast on Basic Income #7 (13/11/25)

by BINews | Nov 25, 2013 | Opinion

Respective Links:
0:31 Canada – Megan McArdle
https://binews.org/2013/11/megan-mcardle-%e2%80%9ccanadian-test-shows-income-guarantees-dont-work%e2%80%9d/

0:46 Canada – Bruce Stewart
https://binews.org/2013/11/canada-bruce-stewart-%e2%80%9ccanadian-senator-hugh-segal-and-his-guaranteed-income-plan%e2%80%9d/

1:16 Africa, India – Shanta Devarajan
https://binews.org/2013/11/shanta-devarajan-%e2%80%9clet-them-eat-cash%e2%80%9d/

1:31 Switzerland – Jillian Steinhauer
https://binews.org/2013/11/jillian-steinhauer-%e2%80%9can-artist%e2%80%99s-plan-to-get-everyone-in-switzerland-paid%e2%80%9d/

1:45 The United States – Tim Krider
https://binews.org/2013/11/tim-kreider-%e2%80%9cthe-%e2%80%98busy%e2%80%99-trap%e2%80%9d/

2:13 Africa – Maniza Naqvi
https://binews.org/2013/11/maniza-naqvi-and-marcelo-giugale-mineral-wealth-can-finance-direct-dividend-payments-to-citzens/

2:59 Blog Post – Heteconomist.com
https://binews.org/2013/11/heteconomist-com-%e2%80%9ca-big-justification-under-capitalism%e2%80%9d/

3:16 Book Review – Malcol Torry
https://binews.org/2013/11/tracy-shildrick-robrt-macdonald-colin-webster-and-kayleigh-garthwaite-poverty-and-insecurity-life-in-low-pay-no-pay-britain/

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Tracy Shildrick, Robrt MacDonald, Colin Webster and Kayleigh Garthwaite, Poverty and Insecurity: Life in low-pay, no-pay Britain

by Citizens' Income Trust | Nov 22, 2013 | Opinion

Tracy Shildrick, Robrt MacDonald, Colin Webster and Kayleigh Garthwaite, Poverty and Insecurity: Life in low-pay, no-pay Britain, Policy Press, 2012, v + 256 pp, pbk, 1 847 42910 0, £26.99, hbk, 1 847 42911 7, £70

There is no better way to learn about the effects of the UK’s employment market and its tax and benefits system than to hear people tell their stories; and the stories that we hear are stories of the ‘precariat’ (Guy Standing, The Precariat, Bloomsbury, 2011): people whose lives are characterised by precarious employment – if any – and by the resulting precarious income. The back cover of the book says that ‘this book is the first of its kind to examine the relationship between social exclusion, poverty and the labour market’. Not true. Trapped in Poverty: Labour-market decisions in low-income households, by Bill Jordan et al (Routledge, 1992), followed similar qualitative methods and told a similar story: similar, but not the same, because comparing the two books shows that today many individuals and households are in a far more precarious situation than the households that Jordan and his colleagues interviewed on an Exeter local authority estate twenty years ago. (Trapped in Poverty is not in Poverty and Insecurity’s bibliography.)

Poverty and Insecurity’s first substantive chapter, chapter 2, describes the book’s ‘dynamic’ approach to poverty: that is, an approach that studies how people move in and out of poverty. (Here Ruth Lister’s Poverty, published in 2004, ought to have been referenced.)  The authors discuss recurrent poverty, low paid work, the low-pay, no-pay cycle, precarious work, and poor work, all of which appear throughout the book. They discuss the precariat and find that its growth is largely due to workers being ‘bumped down’ from higher-skilled to lower-skilled jobs; and that one of its most significant features is the high transaction costs experienced when people lose a job: a period of no income while benefit claims are processed, leading to debt, and then to unrepayable debt. A brief history of our means-tested and demeaning benefits system leads to the conclusion that the benefits system contributes to the poor quality of low paid jobs.

Chapter 3 describes Middlesbrough, where the research was carried out, and also describes the qualitative method; and chapter 4 describes employers’ and ‘welfare to work’ agencies’ perspectives on the low-pay, no-pay cycle, and finds that such agencies have little contact with people who are regularly in and out of work because their schemes are designed to cater for the long-term unemployed.

Chapter 5 finds that low paid and insecure jobs lead to more of the same and are not stepping stones to better jobs; and interestingly that this difficult experience does not dim people’s work ethic. Chapter 6 discovers that qualifications might or might not be a road to good jobs, and that most insecure jobs are obtained through friendship networks (an efficient method for both employers and employees when the job might not last very long). Chapter 7 finds that the main drivers of the low-pay, no-pay cycle are the supply of insecure employment and workers’ willingness to accept it; chapter 8 discusses the circular relationship between illness and poor jobs, and the similar relationship between caring responsibilities and poor jobs; and chapter 9 concludes that ‘neither work nor welfare protected the interviewees from poverty’ (p.189).

Chapter 10 concludes that work is not necessarily a route out of poverty, largely because there is a plentiful supply of low-skilled, short term employment, and workers are willing to apply for such jobs. The result is a lot of people in a low-pay, no-pay cycle, and therefore socially excluded core members of the precariat.

Most of the book is well-evidenced diagnosis. The final few pages are prescription: better jobs, by paying a living wage and improving conditions; and poverty reduction by increasing the level of benefits. The authors find the benefits system to be moving in a punitive direction. Two myths that the authors tackle are that benefits are too high and that the poor do not wish to work. Neither is true.

The authors ask for a ‘welfare system that promised social security not greater insecurity’ (p.223) – a good description of a Citizen’s Income.

Podcast on Basic Income #6 (13/11/18)

by BINews | Nov 18, 2013 | Opinion

Respective Links:
0:32 The United Kingdom – Mehdi Hasan
https://binews.org/2013/11/mehdi-hasan-%E2%80%9Cwe-could-fix-our-economy-by-giving-every-man-woman-and-child-6000-in-cash%E2%80%9D/

1:17 Switzerland – Enno Schmidt
https://binews.org/2013/11/we-are-not-beautiful-%e2%80%9cinterview-with-the-group-behind-the-swiss-basic-income-referendum%e2%80%9d/

1:47 The United States – The New York Times
https://binews.org/2013/11/annie-lowrey-%e2%80%9cswitzerland%e2%80%99s-proposal-to-pay-people-for-being-alive%e2%80%9d/

2:38 The United States – Fox news
https://binews.org/2013/11/video-fox-news-calls-basic-income-a-great-idea/

2:53 The United States – A Petition at the Whitehouse.gov
https://binews.org/2013/11/petition-at-whitehouse-gov-calls-for-basic-income/

3:32 Belgium – Philippe Van Parijs
https://binews.org/2013/11/philippe-van-parijs-%e2%80%9cthe-universal-basic-income-why-utopian-thinking-matters-and-how-sociologists-can-contribute-to-it%e2%80%9d/

4:13 Canada – Edward Miller
https://binews.org/2013/11/edward-miller-%e2%80%9cthe-basic-income-is-dead%e2%80%9d/

4:24 Canada – BICN
https://binews.org/2013/11/canada-bicn-announces-%e2%80%9cthe-big-push%e2%80%9d/

5:01 Book Review – Allan Sheahen
https://binews.org/2013/11/allan-sheahen-basic-income-guarantee-your-right-to-economic-security/

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Allan Sheahen, Basic Income Guarantee: Your right to economic security

by Citizens' Income Trust | Nov 15, 2013 | Opinion

Allan Sheahen, Basic Income Guarantee: Your right to economic security, Palgrave Macmillan, 2012, xv + 204 pp, 1 137 00570 0, pbk, £17.50, 1 137 34788 6, hbk, £62.50

Each adult who files an income tax return receives an annual ‘BIG’ [Basic Income Guarantee] or ‘refundable tax credit’ of $10,000 – just under the official 2010 poverty level of $11,139 for one person. The ‘refundable tax credit’ is available to everyone … All income other than this credit is taxed. If a person has no income at all, he or she keeps the full credit and pays no taxes. … If a person’s income is high, the amount to be paid in taxes will be larger than the credit received and … the person will pay out the difference in positive taxes. … the system is universal – everyone files a tax return, everyone gets a tax credit, and everyone with any income pays taxes. There is no means test, no work requirement, and no explicit eligibility criteria. No one receives a net transfer from the government unless the taxes on the person’s income from all sources are lower than the tax credit. (p.86)

Sheahen suggests on page 3 that different people use the term ‘Basic Income Guarantee’ in different ways, and indeed he offers different definitions on pages 3 and 86. I am assuming that the definition above from page 86 is the one that Sheahen wishes us to employ: and, if that is so, then in this revision of a book that he published in 1983 Sheahen has given us an accessible (in fact, quite chatty) book on Tax Credits: the genuine kind, and not the separately administered means-tested household benefits labelled ‘Tax Credits’ by the UK Government.

Sheahen sets the scene by offering a brief history of the recent US debate on poverty and the benefits system. He goes on to show that employment can no longer provide everyone with a subsistence income (because manufacturing and other processes are increasingly automated), and that inequality is becoming a serious problem; and he rightly suggests that a Basic Income Guarantee would contribute to the solution of these problems. Objections are tackled (such as ‘Is it moral for people to be given income that they haven’t earned …?’ (p.63) and whether people would continue to work: they would). Sheahen studies alternative approaches – such as the Government as the employer of last resort: an idea dismissed as impractical.

A Negative Income Tax (NIT) would be almost identical to Sheahen’s Basic Income Guarantee/ Tax Credit, so he studies NIT experiments undertaken in the USA between 1968 and 1979, and suggests that the fact that a NIT was associated with an increase in the divorce rate should not be regarded as a reason not to establish one. Sheahen studies the Alaska Permanent Fund Dividend, and he also studies discussions on benefits reform in a variety of countries and asks how the benefits reform debate might evolve in the US. Appendices explore affordability, describe the US’s current benefits provisions, and offer additional historical material.

Sheahen’s scheme is similar to that proposed by the Conservative Government in the UK during the early 1970s. The difference is that the UK proposal assumed that employers would administer the Tax Credits alongside Income Tax, whereas Sheahen’s scheme would be administered by the US Government, which for everyone with a tax liability lower than the Tax Credit would pay the difference into their bank account. These two administrative options suffer from different difficulties. If an employer is to administer the Tax Credit then the employer needs to know details of the employee’s income and tax liability relating to sources other than the employer’s payroll; and they need to know how such other incomes and tax liabilities change from month to month. If the Government is to pay the monthly difference between the Tax Credit and the total tax liability accurately each month, then it needs to know how all of that citizen’s incomes from different sources are changing from month to month. Whichever option is chosen, the administrative demands are considerable, as they would be for the similar Negative Income Tax.

Terminological clarity might have been helpful. The BIG scheme proposed is a Tax Credit scheme, and it might have been helpful to call it that (in the same way as Negative Income Tax is correctly described). The BIG described is not a Basic Income (or a Citizen’s Income), which will be confusing for people coming to this book thinking that ‘Basic Income Guarantee’ means ‘Basic Income’: it doesn’t. A Basic Income is an unconditional, nonwithdrawable income paid to every individual as a right of citizenship. Sheahen’s BIG is withdrawn as income rises, it is completely withdrawn at the break even point where tax liability equals the BIG, and it is not paid above that point. It is not a Basic Income, but it would have effects similar to one.

As long as readers approach this book with an understanding of these terminological issues, they will find it a useful contribution to the debate on the reform of tax and benefits systems.