by Citizens' Income Trust | Jul 19, 2013 | Opinion
Sophia Parker (ed.), The Squeezed Middle: The pressure on ordinary workers in America and Britain, Policy Press, 2013, 1 4473 0894 2, hbk, xii + 169 pp, £65, 1 4473 0893 5, pbk, xii + 169 pp, £21.99
This collection of essays tackles a major issue: the declining living standards of households on low to middle incomes (defined as households in income deciles 2 to 5). Both causes and partial solutions are explored. One major cause of declining living standards is the failure to maintain the value of national minimum wages, but another is the gravitation of the proceeds of economic growth towards households in the upper earning deciles, leaving lower earners struggling to afford mortgages, social care, and, in the US, health care. Partial solutions might be focused training, in-work benefits, more affordable housing, higher national minimum wages, employers paying a ‘living wage’, and jobs of better quality ( – the UK has a better record than the US here, particularly in relation to employment rights for agency and part-time workers). The authors suggest that attending to the politics of the situation is essential, and that an important direction of travel might be asset-based welfare provision such as child trust funds, although some of the current attempts at incentivising asset accumulation tend to privilege the already wealthy.
The volume’s concluding chapter finds the US experience to be worse than the UK’s, and warns the UK to avoid policies that have led the US towards ever greater inequality. A particular lesson to take to heart is that the welfare state, and particularly free health care, has protected lower and middle earners in the UK from some of the worst effects of the economic downturn suffered in the United States: so if the UK wishes to avoid the plummeting living standards of the US then maintaining a strong welfare state is essential.
However, as Lane Kenworthy explains, some elements of the welfare state might be more of a problem than a solution. Tax Credits (and Universal Credit) weaken employment incentives, particularly for second earners, ‘and may in fact make things worse for many families’ (p.40). Daniel Gitterman contributes a detailed study of the United States’ Earned Income Tax Credit, in the course of which he makes a few comparisons with the UK’s Tax Credits. He might have added that the US Tax Credits are close to being genuine (annual) tax credits, whereas the UK’s ‘Tax Credits’ are in fact means-tested benefits, with all the problems usually consequent upon means-testing. In their introduction, the editors write that households with net incomes in the second, third, fourth and fifth income deciles are ‘not heavily reliant on means-tested benefits’ (p.xi). This might be true in the US, but it is not true in the UK, where a high proportion of earners in the second and third income deciles will be heavily reliant on means-tested ‘Tax Credits’.
The book covers a lot of ground, in terms of both diagnosis and prescription. However, diagnosis of the employment disincentives imposed by means-tested Tax Credits is not followed up with any prescription for reform. A benefits system based more on universal benefits would not impose anything like the same level of employment disincentives as the UK’s current system. Child Benefit gets a mention (on p.95: a reference unfortunately not indexed), but only as part of an argument that higher out-of-work benefits reduce employment incentives: a highly misleading suggestion, because Child Benefit is paid at the same rate to households both in and out of employment, and so in no way contributes to employment disincentives. It is the deduction rates related to means-tested benefits that cause such disincentives, not unconditional benefits such as Child Benefit.
The declining living standards faced by households with below median incomes are not likely to see much improvement in the near future, and the volume under review will be a valuable tool as policy-makers consider the reforms that might improve living standards for households in income deciles two to five. Policy makers might also wish to consider the possibility that this section of the population would benefit substantially from the implementation of a Citizen’s Income.
by Citizens' Income Trust | Jun 3, 2012 | Opinion
Paul Spicker, How Social Security Works: An introduction to benefits in Britain, Policy Press, 2011, xii + 284 pp, hbk 1847428110, £65, pbk, 1847428103, £23.99
This well-organised book is what it says it is: an ‘introduction’ to the ‘design, management, operation and delivery of benefits’ (p.ix). Its careful structure enables Spicker to bring a sense of order to a system which he recognises to be ‘baffling’ (p.x), though he himself admits that ‘there is a limit to how clear it is possible to make things clear – the structure of benefits does not make sense’ (p.x). A further problem identified is the constant and rapid change from which the system suffers, and this reviewer can empathise with Spicker’s statement that his ‘head is cluttered with old rules and regulations dating back through the last thirty-five years’ (p.xi).
The first part of the book asks ‘What is social security?’ and suggests that ‘there is much more to social security than the relief of poverty’ (p.10). The second part details the development of the system from the Poor Law to the present day, and asks whether the new Universal Credit will in practice be a unified benefit. The third part discusses different categories of benefits (National Insurance, means-tested, non-contributory, discretionary, and universal), how claims are processed, and take-up levels. Part IV debates life’s contingencies (retirement, illness, disability, children, parenthood, lone parenthood, unemployment, and poverty); and the fifth covers such issues as cost, targeting, fraud, the meaning and measurement of poverty, and redistribution. A final chapter compares Britain’s system with those of other countries. A particularly interesting chapter is that on complexity in which Spicker concludes that complexity matters when it leads to the system ‘failing to respond to the changing conditions of people in complex circumstances … We cannot ask claimants to live simpler, more orderly lives’. Part of the answer is to address the issues of ‘conditionality, administrative rules and administrative procedures’ (p.145).
Chapter 12 on ‘Universal benefits’ starts with an argument as simple as the benefits themselves:
The general arguments for universality … include basic rights, simplicity and effectiveness. The central criticism of universal benefits is that they spread resources too widely: if benefits are going to everyone, then either they will be very costly, or they will have to be set at very low levels. This dilemma can be avoided. One option is that universal benefits can be reclaimed through the tax system – a process referred to as ‘clawback’. This has an effect similar to means testing, with two important differences: first, that everyone receives the benefit, and second, that the examination of means is also done for everyone. (p.117)
Then follow a history and discussion of Child Benefit, a description of New Zealand’s universal pension, and a discussion of the Coalition Government’s current consideration of a citizen’s pension for the UK. The chapter concludes with an intelligent and nuanced debate of a Citizen’s Income and with another encomium to Child Benefit:
What Child Benefit offers is a modest but secure element of a family’s general income, something that is fairly predictable and secure. It is the only element of income that seems to continue to function reliably in situations where people are moving in and out of work or where their income is unstable and unpredictable. That seems to me something which is valuable and important, and the principle could be more generally extended. (p.124).
In his concluding ‘Postscript: Social Security: a programme for reform’, Spicker’s first recommendation is: ‘extending the scope and value of less conditional benefits, like Child Benefit, which also helps to stabilise the income during transitions’ (p.274); and the first suggestion in a list of ideas for ‘reducing complexity, error and administrative confusion’ is ‘replacing some claims with automatic payments’ (p.274).
Spicker doesn’t put it like this, but it would be perfectly fair to describe his book as a sustained argument for a partial Citizen’s Income.
by Yannick Vanderborght | Aug 30, 2009 | Opinion
There is not a lot that one can write about this that has not already been written.
I need to work, in order to make something of my life.
I need to work, in order to gain the recognition of my fellow citizens.
I need to work, in order to feed my nearest and dearest.
I need to work, in order not to be a burden on the public purse.
I need to work, for these and many more reasons …
I want to work, in order to make something of my life.
I want to work, in order to gain the recognition of my fellow citizens.
I want to work, in order to feed my nearest and dearest.
I want to work, in order not to be a burden on the public purse.
I want to work, for these and many other reasons…
Is it that I want to work – or do I only need to do so? And what does “work” mean anyway?
There is hardly another concept in the world which is so vaguely defined as the concept “work”.
Let us take the example of a gardener. For a gardener, caring for a garden, designing it and laying it out is “work”. They would go through the process of getting their tools and equipment for their work, be it from TradeFix Direct or anywhere else, and set out for their project accordingly. Many other people, however, go out of their way to lease themselves a little garden in which they can carry out these very same activities in their spare time. That is to say, their gardens serve them as spare-time recreation, as a hobby.
This would suggest that one might be able to argue so: the gardener doesn’t really do any work at all; he just spends his time pursuing a hobby.
But this line of argument doesn’t work. Were the gardener to become unemployed, he would always have the opportunity to lease himself a little allotment and thus pursue his hobby. And, on the terms of the argument proposed, all would then be in order. But, in fact, the unemployed gardener would certainly say: “I want work”.
We attempt to get around this contradiction with the help of the term “gainful labour”. We describe as “gainful labour” every activity for which we receive monetary remuneration.
But this definition also leads nowhere: a painter paints a picture for which, during his lifetime, no buyer is to be found. He dies in poverty. That is to say, he has not, in his lifetime, practiced any labour that could be described as “gainful”. After his death, however, this picture fetches an enormous price. Must we say that the financially unrewarding hobby he had been practicing hereby suddenly became “gainful labour” after all?
It is true that one can solve this problem by amending the definition slightly and saying rather that “gainful labour” is an activity for which one receives monetary remuneration at a point in time more or less coincident with the performance of said labour.
In so amending the definition, however, one establishes a complete disjunction between the actual performance of work, on the one hand, and “gainful labour” on the other. For then we would have to say – to hold to the original example of the painter and his picture – that the individual who actually performed the work had not, in doing so, engaged in any “gainful labour”, this “gainful labour” having to be ascribed here rather to the individual inheriting the picture. And this despite the fact that this heir to the painter’s production has hereby engaged in a “gainful labour” which has plainly involved no effort, on his part, at all – an activity, as it were, without activity.
This implies, however, that the painter of the picture must have engaged, for his part, in what we would have to call “gainful labour without gain”, since the picture constitutes the object of the “activity without activity” of the person inheriting it.
Clearly, however, there can, per definitionem, be no such thing as “gainful labour without gain”, so that the concept “gainful labour” seems also to lead us into an argumentational culde-sac.
The Calvinist work-ethic attempts to get around the question “what is work?” and focuses rather on the basic dogmatic claim that the justification for Man’s whole existence inheres exclusively in his vocation to work.
Calvin favours here a definition of “work” which (measured by today’s standards) is a very broad and inclusive one. Thus both the activities of a housewife and those of a “hobby” gardener tending his garden count, for example, on Calvin’s terms, as forms of “work”.
In the modern world, with its highly developed division of labour, in which all of us tend to work (in the sense of manufacture or produce) exclusively for others and to hardly any degree for ourselves, gainful labour is no longer a matter of an activity giving sense and meaning to our lives but rather one of how we “get by” materially, that is, how we gain our “livelihood”.
Where one establishes a fixed linkage between “getting by”, or “livelihood”, on the one hand and gainful labour on the other, however, it follows that there will surely be such things as people “earning their livlelihood” without actually performing any labour and, conversely, people performing labour without this sufficing to a livelihood.
This is a situation which those performing labour without being able to “get by” on its financial results will naturally feel to be deeply unjust, and also one, of course, which those earning a livelihood and even a good livelihood without having to perform any sort of labour will want to maintain as long as possible.
This tends to lead inevitably, at least in the short term, to a gaining of the upper hand by those “earning a livelihood” without actually having to perform any sort of labour. This inasmuch as, in the first place, a person in this position will certainly be ready to take almost any step in order to ensure that those actually performing some sort of labour do not come to acquire their share in the wherewithal required to “get by”; the fact of some people’s actually performing work in order to gain their livelihood would sooner or later, whether the working individuals intended it to do so or not, tend to put into question the legitimacy of “earning a livelihood” without work being performed.
In the second place, much less time and effort is involved in the mere marketing of products in which one has invested no labour than in the innovative creation of products which are actually the results of some work. One might give here as examples such businesses as the “ring-tone” industry or the positive cult that has grown up around certain brand-names.
One might, indeed, speak of a ring-tone as itself innovative were it, for example, activated in a manner attuned to surrounding noises, so as to be better audible in real environments. Similarly innovative would be a piece of clothing that automatically adjusted to changing weather conditions. But there is simply no innovative or productive effort involved in the marketing of music-samples as ring-tones or in the printing of famous brand-symbols on clothing.
Sooner or later, “earning a livelihood” without actually performing any work in order to do so will be a mode of existence which will bring about its own elimination. Either because those who perform some work without being able to “get by” on its financial results will no longer put up with the situation, or because “earning a livelihood” without performing work will prove to be no longer financially sustainable.
Automation and “Work”
Whereas it was still possible up until a few years ago to define gainful labour with the aid of one or another type of “measurement of performance” (bonuses, definitions of minimum requisites for particular jobs, indispensable training requirements etc.) the increasing trend to automation is making the weak points and errors in this system more and more clear.
In the car industry, for example, we have seen some welders being replaced by robots. Whilst this has been seen in some situations, a lot of car manufacturers are prioritizing humans for this job. Robots cannot offer the same level of care and detail that a human can offer, this is why some car manufacturers are keeping human welders in the job to make sure manufacturing quality remains high. A lot of companies are also continuing to take on new welders, so it might be worth reading some advice from David from the weldinginsider if anyone is thinking of becoming a welder. It’s an exciting job that hasn’t been completely taken over by robots yet. However, this raises the decisive question:
Is a robot now working where a human being once worked?
If one answers this question with “yes”, the effects on the concept of “work” are extremely far-reaching. Because, then, one would have to define “work”, at least in large sections of the area covered by this term, in terms of value-creation or of expenditure of energy.
But if one answers it with “no”, then one implicitly denies thereby the essential relatedness of work to performance, with the consequent self-contradictions which we outlined above.
It was the view of Karl Marx that human beings alone are capable of “work” in the true sense. So long as one were to assign to the robot in the car factory, as a supervisor or mechanical operator, the very same human being who had once occupied the job it now occupies (that is to say, the welder himself) then one would at least have satisfied the conditions Marx believed are necessary in order for us to be able to speak at all of “work”‘s being done.
Once things, however, had progressed to the point where the robot no longer required either supervision nor the services of any sort of operator, then the worker placed in such positions would be acquiring a “livelihood” which would no longer involve any actual performance of work – but would, for just this reason, certainly involve all the internal self-contradictions which we have outlined above.
Marx, however, has nothing at all to say about the possible solution to the problem which would consist in continuing to extend to the welder that “livelihood” which he has now reached the point of acquiring without actually having to perform any work while relieving him from the obligation to be actually physically present at the place of production (this physical presence having become, in any case, something without use or relevance to the production process).
Where one chooses to pursue this thought to its conclusion, however, one has in the end no choice but to recognize the robot and his “operator” as forming a team. And such being the case, the question must also be raised of how the wages for the task performed by this team are to be divided up between robot and man.
Here, the wage received by the robot has a precisely defined limit below which it may not fall. In the case where it no longer receives enough energy to do its work (and in talking about a “wage” here it is really an amount of energy that we are talking about) the robot will not moan or complain, but simply cease then and there to execute its activities. At the moment in which this “wage” is once again raised to a tolerable level, the robot will waste equally few words or time in beginning once again to carry out its assigned operations.
Given, then, that “bargaining” and “negotiating” with the robot about the part of the wages that it is to receive is out of the question, the worker clearly has no choice – when it comes to the question of the amount of the wherewithal to a “livelihood” which he is to receive without having actually provided any work in exchange for it – but to content himself with what the robot leaves over for its “partner” after it has extracted all that it needs to cover its energy requirements.
The corollary of this, however, is that, the lower the cost of covering these energy requirements, the more there will remain left over to make up the wherewithal for a “livelihood” that can be accorded to human beings without their having to perform work in exchange for it – assuming, that is, that prices and profits remain constant.
This whole consideration leads finally to the definition that “gainful labour” (be it of human or of mechanical origin) cannot possibly be anything else but that part of production which consists in energy and which is employed to economic ends.
From this definition there logically follows the recognition that every type of work is, in principle, of equal value with every other type, since, in purely biological terms, the energy invested by a day-labourer cannot be said to be essentially distinct from that invested by a university professor. And in neither case is it possible that the economic orientation of this energy exceed a maximum no different for the professor than for the labourer.
Another recognition that must follow from the above is that work itself is in the first instance without value. Because it is impossible to speak of monetary “value-creation” at any point before the product has been completely manufactured, sold and paid for.
Any differentiated monetary remuneration for a contribution to the production process (namely, work) which is itself monetarily value-less must inevitably lead to the emergence of inconsistencies in the system.
Now, a possibility here would apparently be to compensate all those involved in any part of that process of monetary value-creation which gives rise to the final product to a degree proportional to the amount of work which they actually contribute thereto. But this possibility would only be a real possibility if the process of value-creation giving rise to the final product were one which could be clearly and cleanly isolated and distinguished from all other social processes.
Such, however, is simply not the case, as we can see from the example of the car industry:
It is one thing to manufacture cars; it is quite another thing to have to hand a market on which such cars can be sold.
Not much is required in order to actually build a car: a little metal, some plastic, a degree of know-how, silicium (sand) for chips, and glass – and there you have your car.
In order to make a car run, though, somewhat more time and effort is required. One needs oil refineries, to manufacture petrol. Indeed, if the petrol is to have the quality required, a whole petro-chemical industry is needed. The same is true of lubricants and other materials.
Additionally, it is also important to remember that there is a chemical risk at each stage of production of a car. The manufacturing process involved in producing engines, plastics, and various other elements of a car requires the use of chemicals such as adhesives, acids, bases and cleaning chemicals, in plastics, in foams and in surface treatments.
Accordingly, most of these products are corrosives or irritants. They are present at varying concentrations and in several unique quantities. Correspondingly the risk zones are the production areas, the decanting areas, valves and pumps, and sometimes the open baths. Furthermore, most of these chemicals are handled in laboratories and although using a face mask is essential to protect employees from breathing in harsh chemicals, there is still a constant risk of projection and chemical spill.
With this in mind, it is crucial that car manufacturers make use of chemical storage solutions to prevent hazardous chemicals from spilling or leaking. For instance, most car manufacturers make use of bunded storage. Put simply, a bund is a secondary containment area in a tank or a drum where any spilled liquid can collect if the original storage option fails.
Due to the diversity of chemicals used throughout the industry, there are lots of different bunded storage options available for industrial users. You can learn more about bunded storage by taking a look at some of the resources on the Storemasta website.
Now the car is actually up and running; in principle, one could drive. But where is the road that one needs to drive on? Where are the petrol stations which enable one to get back when one has driven far from home? Where are the traffic lights that organize traffic?
Cars are easily built; they become bearers of monetary value, however, only once they have been sold and paid for. But who would ever buy a car if there were no roads to drive it on, no petrol stations at which to refuel it?
For this reason, we may say that those involved in the building of roads also make their contribution to the monetary value-creation process of the car industry. Were there no roadbuilders, there would be no value-creation in the form of car manufacture; conversely, however, were there no cars there would likewise be no value-creation in the form of the construction of roads.
Our modern society, characterized as it is by a very highly developed division of labour, is one that displays a kind of dependence even on that most notorious example of the individual contributing no “gainful labour”: the “TV junky”. Were there not people who are constantly “working” in this way in front of their television sets, it would be impossible for the TV stations to generate that income from advertising which contributes so much to their own monetary value-creation process.
The more developed the division of labour becomes in our society and economy, the less it is possible to ascribe processes of monetary value-creation to individuals or to individual groups.
If we wish to see the social peace and harmony of our society maintained (some might say that it is a question of restoring a social peace and harmony already lost) it is imperative that we guarantee the basic livelihood of all the people forming this society, and do so by seeing to it that each of these people receives his or her equal share in the social process of monetary value-creation in the form of a “citizen’s allowance”, or an Unconditional Basic Income (UBI).
Such an Unconditional Basic Income should not be confused with any type of “social security” or “welfare” benefit in the hitherto current connotation of these terms. Rather, it is a matter of a basic right which can be claimed by each individual citizen and which can be convincingly logically justified on the basis of the new “work ethic” promoted by Jovialism.
Under conditions in which it is no longer possible to distinguish clearly and unambiguously – and thus no longer possible to distinguish fairly and justly – between one individual’s apparent participation in the process of monetary value-creation and another’s apparent nonparticipation, and between the different degrees of said participation, the only possible fair and just solution to the problem is that consisting in an equal distribution – at least of parts of the value generated by the socio-economic process.