Book review: ‘Could a Citizen’s Income work?’

by Citizens' Income Trust | May 24, 2015 | Opinion

Donald Hirsch, ‘Could a Citizen’s Income work?’ A paper commissioned by the Joseph Rowntree Foundation as part of its Minimum Income Standard programme, and published in March 2015. www.jrf.org.uk/publications/could-citizens-income-work

The Citizen’s Income Newsletter usually mentions relevant think tank research and working papers in the ‘news’ section, or occasionally in the context of an editorial, but Donald Hirsch’s paper is particularly significant and so demands a full review. Its importance is twofold: it evaluates a number of Citizen’s Income schemes for viability; and it identifies the changes that might be required in the ways in which the public and policymakers think about income maintenance if a Citizen’s Income were to be a possibility. The paper therefore tackles a number of different feasibilities: financial feasibility, psychological feasibility, and what we might call institutional or policy process feasibility.

The paper recognises that a Citizen’s Income would address some very real problems experienced by the UK’s current largely means-tested benefits system. For instance: a Citizen’s Income would not be withdrawn as earnings rose, and so would not impose the employment disincentives that means-tested benefits currently impose; no stigma would be attached to a Citizen’s Income; and a Citizen’s Income would be simple in structure and so would not suffer from the complexities of much of the current system. The full list of arguments on page 4 of the paper is a model summary of the case for a Citizen’s Income.

The major contribution of the paper is the way in which it outlines the three ‘seismic shifts’ that would need to occur in public attitudes if a Citizen’s Income were to be implemented. The public and policymakers would need to be convinced

1. ‘that everyone should be given some baseline level of financial support from the state, even if they choose not to do anything to try to earn money for themselves;’ (p.5)
2. ‘that the basic marginal tax rate should be substantially higher than it now is, since otherwise almost everybody’s net income from the state would rise, and there is no obvious way to finance this.’ (p.5)
3. ‘potentially a reduced role of the state in ensuring that each citizen can afford particular essentials, notably housing and childcare, through income transfers, if a citizen’s income replaced means-tested payments for these.’ (p.3)

Hirsch says of the first two of these seismic shifts:

Politicians are likely to perceive both of these as unacceptable to voters, a view supported by evidence on social attitudes. It can be argued that both of these conditions could become more acceptable under a regime with a citizen’s income than they are now. Persuading the public and politicians of these arguments, however, would not be easy. (p.5)

And he says of the third:

Under a system of largely market-based rents, it would not be easy to include a simple rent element in a citizen’s income payment without creating shortfalls for some or large surpluses for others. (p.5)

Particularly in relation to the first two seismic shifts, Hirsch’s conclusion is that ‘a debate about the principle of a citizen’s income may thus contribute to a long-term reconsideration of policies and attitudes towards state support’ (p.3).

The paper contains a useful study of the differences between Universal Credit, Negative Income Tax, and Citizen’s Income; a discussion of the ways in which Income Tax would have to rise to pay for different levels of Citizen’s Income; an exploration of the different ways in which Citizen’s Income schemes might tackle differing housing costs; and a discussion of the way in which abolishing tax allowances, such as the Personal Allowance, rather than simply raising Income Tax rates, could pay for a Citizen’s Income. It also contains a description of the differences between the levels envisaged in various researched schemes and the Minimum Income Standards researched by the Joseph Rowntree Foundation ( – although it has to be said, of course, that the current benefits system does not come anywhere near to the levels of the Minimum Income Standards). Then follow descriptions of the kinds of households to which a Citizen’s Income would tend to redistribute income, and the important statement that ‘all the [paper’s] calculations make the simplified assumption of no behavioural change. Knowing what would actually happen to earned incomes as a result of a citizen’s income is very difficult, but is likely to affect outcomes quite profoundly’ (p.16). Then come discussions of household and individual assessment units, the effects of different approaches to meeting housing costs, and lifecycle redistribution. A particularly important section is a discussion of a Partial Citizen’s Income as a stepping stone towards a full one. A partial Citizen’s Income would be likely to impose losses on low income families if means-tested benefits were abolished, and to impose additional complexity if they were not. Hirsch suggests that a Partial Citizen’s Income might be useful if it could be implemented as one stage of an already agreed plan to implement a full Citizen’s Income. There is much merit in this suggestion.

Hirsch describes the Alaska Permanent Fund, and the Namibian and Iranian schemes, but not the more recent Indian pilot project. He correctly points out that these schemes have not reduced employment market activity, and might also have said that in the Namibian pilot project a significant increase was in evidence.

Hirsch makes the important point that income is different from such services as healthcare and education because households generate income as well as require it. This means that it is important to ensure that a Citizen’s Income scheme does not inadvertently reduce the amount of income created, and that both removal of the Personal Tax Allowance and higher Income Tax rates might have such effects on earned incomes. In his concluding section, Hirsch suggests that a Universal Credit with a lower taper rate might be a useful step in the direction of a Citizen’s Income. He might also have pointed out that Universal Credit is not universal, is not based on the individual, is not unconditional, is still means-tested, and is regressive.

When it comes to the study of particular Citizen’s Income schemes in the paper’s appendices, the paper makes two valid points: that the immediate implementation of a ‘full’ Citizen’s Income is unlikely to be feasible in the short term; and that, because a ‘partial’ Citizen’s Income would not fully replace means-tested benefits, it could make the system even more complicated.

Following a description of the Citizen’s Income Trust’s 2013 illustrative scheme, Hirsch proposes changes and lists their additional costs, which is useful, but is not itself a criticism of the scheme as published. He then studies the Institute for Social and Economic Research working paper proposals (reprinted in the previous edition of this Newsletter), and correctly recognises that in order to reduce losses in disposable income, a means-tested system needs to be retained and that this would create an additional level of complexity.

Hirsch’s descriptions of these recently researched Citizen’s Income schemes are largely accurate. There are places in the discussion at which a broader canvas would have been helpful. For instance, the discussion of the higher rates of Income Tax that would be required might have included consideration of overall gains and losses – for if a household’s Income Tax rate rises, but the overall effect of the Citizen’s Income, increased Income Tax, and alterations in other benefits, leaves the household with the same disposable income, then for households originally on in-work or out-of-work means-tested benefits, it really is no problem that Income Tax rates have risen – except that, as Hirsch correctly points out, Income Tax rates are a psychological issue as well as a fiscal one: and it is in the area of the psychological issues related to Citizen’s Income that his paper makes a most useful contribution. An additional important issue is that where households are not currently on means-tested benefits, and Income Tax rates rise, then even if there is no overall loss in disposable income at the point of implementation of a Citizen’s Income, those households’ marginal deduction rates will rise. This might result in behavioural change in the employment market.

A further issue to which Hirsch correctly draws attention is that of redistribution. For schemes in which means-tested benefits are abolished, redistribution effects could be substantial. Hirsch evaluates a particular scheme of this nature, and concludes that

the overall distributional effects would include, but not be restricted to, a redistribution of income from better to worse off groups. There would also be a significant redistribution from people without children to those with children among lower earners, and also some losses for those with very low part-time earnings. Finally, … among groups presently receiving transfers from the state, couples would do relatively better than single adults (with and without children). (p.15)

So either such redistributional effects would need to be justified, or a different kind of scheme would need to be selected. Hirsch does not study in detail the redistributional effects of Citizen’s Income schemes that retain means-tested benefits, where those means-tested benefits are recalculated by taking into account households’ Citizen’s Incomes as existing income. This would require the kind of microsimulation work contained in the Institute for Social and Economic Research working paper (Torry, 2015). The low levels of gains and losses generated by such modelling of the alternative schemes in that working paper suggest that redistributional effects would be far less significant than for schemes that abolish means-tested benefits. Clearly further research is needed in this area.

In relation to those same alternative schemes, and to his discussion of housing costs on p.13, Hirsch might have mentioned that the schemes researched in the 2015 Institute for Social and Economic Research working paper are clear that housing costs support would be left as it is under the current system. A further issue that Hirsch might have discussed is that the ISER paper employed the Euromod modelling software and Family Resource Survey data to generate entirely robust costings and results on gains and losses. As he recognises on p.26, his own paper does not calculate precise tax rates and income outcomes. It would have been able to do so if his suggestions had been modelled using Euromod.

This review cannot do proper justice to the detail contained in Hirsch’s well-researched and well-ordered paper, but we hope that it will encourage our readers to read his paper for themselves, to study his arguments, and to ponder his conclusions. Any future study of the feasibility of a Citizen’s Income, and of particular Citizen’s Income schemes, could do a lot worse than set out from the arguments of this paper.

Hirsch has already done the Citizen’s Income debate a significant service, and we hope to see further such analysis and argument in the future. What would be particularly useful would be to have a side-by-side evaluation of the current benefits system and of a Citizen’s Income scheme (both with and without accompanying means-tested benefits), treating the two systems as competitors on a level playing field, and evaluating them according to a set of clear criteria. As Hirsch says,

the present system suffers from strong negative perceptions and a consequent lack of political support, which has helped the implementation of recent cuts in the real value of benefit levels without obvious political fallout. If a citizen’s income or any other reform could command public confidence, this would help strengthen the underpinning of a system which ensures that nobody in the UK lacks a basic level of income. (pp.4-5)

Report from London Futurists’ event

by Marlies Kunnen | May 19, 2015 | Opinion

The Case For Universal Basic Income, 14th February 2015

What will be the impact of technological change on society? We are often told that people whose jobs are automated will simply retrain and find work in new occupations, the same way farmers became factory workers following industrialisation. However, will this continue to be true now that the pace of change is much higher than it was in the age of the Industrial Revolution? In an attempt to explore the relationship between technology and the economy and society, the London Futurists invited Barb Jacobson and David Jenkins of Basic Income UK to Birkbeck College on the 14th February to talk about Basic Income.

David explained why Basic Income should be unconditional: to give people the means to live and to flourish, to provide people with the freedom to do what they want to do, to acknowledge the value of unpaid work (which accounts for 25% of GNP), to rein in the state’s bureaucratic reach, to distribute the means of consumption, to strengthen the labour movement so that people can demand a shorter working week, and to disrupt unjust social practices. In order to perform the above functions Basic Income will need to be high. In parallel, other provisions are needed as well: for example, an increase in housing supply.

Barb pointed out that the most important work ( – the work that keeps society going) attracts the least money in the labour market. Basic Income would address this. It is not a new idea: Thomas Paine was already advocating it in 1795. Virginia Woolf, who would undoubtedly have been a member of the London Futurists were she alive today, expected Basic Income to be introduced by 2029.

Our current levels of government surveillance and bureaucracy were illustrated by photos of a recent 6 a.m. police raid on a house inhabited by a suspected ‘benefits cheat’. Do we really want a government that spends its resources on spying on its citizens in order to find out if a separated couple has really separated and is not claiming £50 per week too much?

Potential ways to fund Basic Income that were discussed included patents, copyright, dividends, a Tobin tax, and the closure of tax loopholes.

In the question and answer session there was discussion on the implications for industry, and for money as a motivator ( – when people get paid for doing something are they more or less motivated to do it?). Someone worried that no one would do the ‘nasty work’ like sewer cleaning. It was suggested that people would demand better pay for doing this work and therefore it would become more efficient to automate it. There was also discussion on inflation and whether Basic Income would drive consumption of unsustainable resources. Will people buy more goods, or will they buy better quality goods? Research from India suggests the latter. A futurist suggested that we should view Basic Income as an investment because it will pay for itself by reducing the crime rate. It was also pointed out that we already have a Basic Income for the wealthy in the form of quantitative easing.

Someone suggested that first the right to create money should be transferred from corporations to governments; and the suggestion was also made that if politicians never agree to introduce Basic Income then people might introduce it themselves anyway, perhaps through cryptocurrencies.

Futurists are of the opinion that within the next thirty years robots will become smarter than humans. Let’s hope that before we reach that point humans will be smart enough to introduce Basic Income.

A Basic Income Women Action Group Statement

by Guest Contributor | May 14, 2015 | Opinion

April 28, 2015

A Basic Income Women Action Group

Statement Prepared by

Liane Gale, Ann Withorn and Kristine Osbakken

Inspired by conversations and presentations at the 2015 North American Basic Income Guarantee Congress in NYC

1. The broad goal of the group is to connect women within the Basic Income movement, and also to connect with women of other economic/social/environmental justice activist groups, where people are mindful of the dignity of all people and the planet. We are committed to exposing the problems within current economic, political and social systems, to questioning these systems from a women’s point of view and to arguing for Basic Income as a vital avenue towards systemic change. Group members are also committed to contributing to a healthy community, connecting and interacting with each other based on solidarity and compassion.

2. Support for a Women Action Group within the Basic Income movement draws from both historical and contemporary sources. Martin Luther King wrote in 1967: “I am now convinced that the simplest approach will prove to be the most revolutionary. The solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed annual income”. The history of the U.S. Welfare Rights movement also reminds us that poor women and their allies recognized a “Guaranteed Adequate Income” as their welfare plan, particularly to eliminate sexism from welfare, with National Welfare Rights Organization leader Johnnie Tillmon affirming in 1972 “the right to a living wage for women’s work, [is] the right to life itself”. And today, activist men from across the world have joined the call. Here is globalist Nafeez Ahmed: “If we want to save the planet, patriarchy must die. That means recognizing and taking responsibility for the fact that patriarchy is integral to the structures of power we take for granted, across East and West. There’s no time to waste. If misogyny wins, the planet dies.”

3. Action Items.  We propose several general avenues for how a Women Action Group can come together as part of the full Basic Income movement. We seek further discussions and refinement regarding these proposals from all sections of the movement.

The Basic Income Women Action Group will:

• Connect with women already active in the Basic Income movement, both nationally and internationally, for the sake of building stronger networks and solidarity;
• Promote the staging of forums in venues that will examine Basic Income through a gender lens — and introduce this perspective within all public discussions of Basic Income;
• Serve as a nexus for informing people about the existing literature and activist resources on Basic Income and women;
• Support the writing of open letters asking international, national, state and local organizations and movements to discuss and endorse Basic Income, especially in regard to its immense potential to positively affect all women and their families;
• Support initiatives that promote gender parity within Basic Income organizations such as NABIG and BIEN, especially in regard to events that are the “public face” of our movement.
• Support pro-Basic Income policy campaigns. When possible, we would also like to offer coordinated support for women candidates and those leaders, who are working toward a Basic Income at any political level.

We seek suggestions and reactions from all, but also specifically encourage comments and ideas from those who are already connected with the Basic Income movement.

Feel free to join or to contact any of us in the Basic Income Women Action Group:

Liane Gale, liane.gale@gmail.com (Roseville, MN));

Ann Withorn, withorn.ann@gmail.com (Boston, MA);

Kristine Osbakken, krissosbakken@gmail.com (Duluth, MN).

Basic Income Day is a great idea, but not on May Day!

by Jurgen De Wispelaere | May 2, 2015 | Opinion

Basic income activists around the world are doing a great job (sic!) putting the idea of granting each individual an unconditional guaranteed income at the frontlines of policy proposals to combat poverty, social exclusion and economic inequality. A basic income is different from a wage precisely in that everyone gets it, independent of whether you are working in company or the public sector or not. One of the strategies to draw attention to basic income is to rethink May 1, traditionally International Worker’s Day, as Basic Income Day.

Having a Basic Income Day to rally everyone around the world together for the cause is a great idea, but opting for May 1 is a serious mistake. International Workers’ Day was chosen during the Second International to coincide with May Day in commemoration of the Chicago Haymarket Massacre, a bombing that took place at a labour demonstration on Tuesday May 4, 1886. International Workers’ Day pays tribute to the numerous sacrifices made by workers across the world as part of a relentless fight to establish the very workers’ rights that we now take for granted: eight hours working day, limited working week, the right to paid holiday and sick leave, and above all the right to collectively organize in a union and negotiate for better working conditions. At a time when many of these rights are again threatened by the austerity agenda we should remember how much blood and sweat it took to get them in place in the first place. Turning May Day into Basic Income Day seems a tad too disrespectful – surely we can do better.

This brings me to two further points related to political strategy. First off, following directly from my last point, we often face an uphill battle convincing our comrades in the labour union movement to join us in our fight. The trade unions have understandable reservations about what basic income means for workers – and face it, we have ourselves partly to blame for not getting the message across – but there is no doubt in my mind that unions are our natural allies and that we need their support. Lets not give them yet another reason to oppose us: there’s plenty of days to chose from without having to step on the toes of those who should be our allies in the fight for a better world.

Finally, one of the leading worries amongst progressives (not just trade unions) is that basic income might end up replacing rather than complementing social protection systems already in place. Again, we are partly to blame for sending this message. (I have written about this elsewhere, but we should really stop pretending that basic income is a solution that can cross the political divides! Any progressive version of basic income worth having will be resisted by the conservatives.) Taking over May Day reinforces the wrong political message and risks further alienating those who would otherwise happily support us.

So by all means, lets pick a day to celebrate basic income, just not May Day!

EDITOR’S NOTE: We welcome a reply to this piece from anyone of the organizers of Basic Income Day or anyone who believes May Day is the best day for Basic Income Day. Contact Karl Widerquist (Karl@Widerquist.com).

Viewpoint: An Unconditional Citizen’s Income

by Ursula Huws | Apr 30, 2015 | Opinion

In these straitened times, the idea of a basic income, granted unconditionally to every citizen, from cradle to grave, feels utopian. How on earth could it be paid for, we wonder. Wouldn’t everyone just stop working? Where would we be then?

I first came across it, in the optimistic late 1960s, in a form that materialized in the so-called ‘fifth demand’ of the Women’s Liberation movement (formulated in 1971) that called for ‘financial and legal independence’ for all women. This had an enormous appeal: not only is it degrading for anyone to have to beg or manipulate someone else for their means of subsistence, and materially damaging to that person if the money is not forthcoming; it also destroys the character of human relationships if they are embedded in relations of dependency. Unequal power relations like those between a husband and a dependent wife, parents and dependent teenagers, able-bodied providers and their disabled dependents can lead to a festering mess of guilt, gratitude and unexpressed anger. The results can range from dishonesty and depression to emotional and physical abuse. In a money-based society, an independent source of income is a pre-condition for human dignity.

Before going any further, I should declare my personal position on this question. I have written intermittently about the idea of a basic minimum income since the 1990s, and would class myself as broadly in favour of the principle, though with some important reservations. In the 1990s I wrote a report on the subject for the Citizen’s Income Trust (CIT), but then backed away from it for a while, for reasons that I will spell out later (under ‘risks’). Since then I have come back to the idea and am now (albeit not as active as I should be, and with some reservations I will come on to) a trustee of CIT. But I am writing here in a personal capacity and my opinions do not necessarily reflect the CIT’s position.

Keeping Body and Soul Together

What I have written below is based on the assumption that a benefit would be paid unconditionally to all citizens, regardless of age, replacing most existing welfare benefits but also the personal tax allowance (at present, the first £10,000 of income for each person is disregarded for income tax, providing a ‘benefit’ of £2,000 per person in tax not paid). Whilst each person would receive the benefit, therefore, they would also pay tax on all income. The level of the benefit, the rate of tax, and the degree to which that tax is graduated would of course be political decisions and I am not going to make detailed proposals here. But my assumption is that the level of benefit would be enough to keep body and soul together and take care of basic needs but not more.

The Advantages

• It would save the state a huge amount of money, currently spent on processing claims and policing benefit claimants and would eliminate the need for many of the present complex array of benefits (sickness benefit, pensions, maternity benefits etc.).
• Because children would be eligible for it, as well as adults, it would be broadly redistributive toward households with children and thus help to alleviate the shockingly high levels of child poverty in this country.
• Because there is no household unit of assessment it might well encourage people to live more collectively, sharing resources with friends and extended families, which would also have environmental benefits and take some pressure off the housing market.
• It would enhance inter-generational solidarity.
• It would make it possible for people to change their working hours flexibly and combine more than one job much more easily than at present.
• Life would become much smoother and simpler for freelancers.
• It would make it much easier to manage illnesses and disabilities and juggle caring responsibilities with work.
• It would also make it much easier to move in and out of education.
• The judgement about what is, or is not ‘work’ would no longer be made by a bureaucratic authority but by the individual. If you want 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, that would be your choice. This is not just good for those individuals but spiritually enriching for society as a whole.
• The labour market would become a little less one-sided. Employers might have to offer a bit more pay to entice people into unattractive jobs. Though, on the other hand, they might find people queuing up to fill the ones that offer high levels of personal satisfaction and reward.

The Risks

• Giving everybody money plays along with the grain of an increasingly market-based economy. The risk is that individual purchases made in the market will drive out collectively-provided services. Recommodification might obliterate decommodification.
• Globalization raises serious questions about what constitutes citizenship. It is perhaps no accident, at least in Europe, that the countries with the most generous welfare states also tend to have the most tightly-controlled borders (think of Denmark). Combining a basic citizen’s income policy with non-racist immigration policies presents some serious challenges.

Conclusion

Although, in my opinion, it would bring huge benefits, an unconditional citizen’s income is not a magic solution to all political, social and economic problems. I believe that it could be one ingredient in the development of a kind of welfare state that is deserving of the name. However it is only one ingredient among several. In particular, it would have to be combined with:

• an increased minimum wage;
• increased investment in universally available public services that are free to the user, including health, childcare, education and social care;
• a recognition that the housing market is so distorted that continuing extra help will be required to house the poorest people in many parts of the country;
• a reformed tax system.

Ursula Huws is Director of Analytica Social and Economic Research; Editor, Work Organisation, Labour and Globalisation; Professor of Labour and Globalisation, University of Hertfordshire. She maintains a blog at ursulahuws.wordpress.com where this article first appeared, and where posts on Income Tax, Universal Credit, and other subjects related to the welfare state can be found