OPINION: Hirsch raises fair points, but misses some key developments

by Josh Martin | Mar 13, 2015 | Opinion

In the run-in to the UK general election in May, discourse has emerged over the Green party’s policies as they have gained increasing support in the polls. Arguably the most discussed policy of theirs has been their support for a citizen’s income (also known as a basic income). Donald Hirsch, writing from the well-respected Joseph Rowntree Foundation, contributed to this debate with a recent policy paper titled “Could a ‘Citizen’s Income’ Work?”.

Hirsch’s paper provides an excellent analysis of the current debate over the logistics of the citizen’s income debate as well as the philosophical reasons to support or reject it. However, his key points concern only the funding a citizen’s income. He argues that “a citizen’s income set at existing safety net levels would require the state to take about half of all earned income above existing tax and NI thresholds” (12). This tax hike would increase further if the citizen’s income absorbed Housing Benefit, which he argues remains a major question mark for any citizen’s income plan, since Housing Benefit’s inclusion in a citizen’s income would require its amount to be doubled. But are tax rates over 50 percent really that horrifying? Until Thatcher was elected the highest income tax rate bounced around 75-98 percent during the previous thirty years.

Regardless, it is unfair to assume that a citizen’s income will be solely paid for using income tax. The Green party explicitly supports a wealth tax, which would certainly go some way toward financing a citizen’s income. The Green party has promised to release a costing plan for their citizen’s income scheme this month, yet Hirsch jumped in to say it was financially ludicrous before seeing their plan.

On another note, Hirsch believes that leaving Housing Benefit separate from a citizen’s income would fail to achieve the simplicity the citizen’s income is supposed to achieve by keeping means-tested benefits in the UK welfare state. However, earlier in this paper Hirsch admits that disability benefits are left out of financing plans by the Citizen’s Income Trust because such means-tested benefits will still be needed to help those who’s cost of living are understandably higher than average. Housing is not much different. Housing Benefit is largely important in the London housing market, and it can be seen as an understandable means-tested benefit to keep. Further, I disagree with his claim that keeping means-tested benefits harms the point of implementing a citizen’s income.

Keeping means-tested benefits like Disability Living Allowance and Housing Benefit does not mean that we should abandon the pursuit of a citizen’s income completely. Implementing a partial citizen’s income—even if it means keeping a means-tested branch of the welfare state—is still worthwhile, as it will incentivize work and establish the importance of unconditional income. Simplicity is not an all or nothing goal.

My last quarrel with Hirsch regards his selective use of empirical examples of partial citizen’s income schemes throughout the world. He highlights the Namibian pilot project, Alaska’s Permanent Fund Dividend, and Iran’s cash benefit in place of subsidies. While Hirsch is correct in saying that none of these are particularly apt comparisons to the UK (the Namibian pilot gave less than $1 per day funded by donors and Alaska and Iran’s programs are funded by resource windfalls) he chose to ignore the more recent Indian pilot projects as well as the negative income tax experiments in the United States and Canada in the 1970s. The latter is a more apt comparison to the UK, since the UK, US, and Canada are all Western developed democracies, and the former proved successful enough that Guy Standing believes that the Indian government will continue to look into cash transfer programs like the citizen’s income.

A citizen’s income in the UK is not as unbelievable as one might think. Conditional cash transfer programs across the Global South have been implemented with success, showing that cash transfer programs (though largely conditional at the moment) have political viability. These programs even finance themselves to an extent since they are commonly adopted as development strategies. Across the world cash transfer programs are gaining momentum, and Switzerland is going to vote on a citizen’s income scheme in 2016.

Hirsch’s article raises many key questions and obstacles for the citizen’s income movement in the UK, but it also neglected to acknowledge the Green party’s forthcoming costing plan, the desirability to implement a citizen’s income alongside Housing Benefit, and legitimate empirical examples of partial citizen’s income schemes. Even if Hirsch disagrees with the citizen’s income as a policy, it has gained enough traction as an idea that he had to write such an article to explain its shortcomings during election season. While I agree that it remains politically difficult to achieve, I do not think he admits just how much progress has been made in the past few years of the movement.