Citizens Income/Universal Income schemes

[Pentagathus]

Sup beeches, so it seems universal income schemes are gaining proponents at the moment (well they're set to be trialled in Finland, Canada and Utrecht) and I wondered what y'all think of the idea.
These schemes vary a lot in the details but essentially the idea is that instead of paying welfare to individuals who meet a certain criteria you simply pay a regular income to every adult citizen regardless of their own private income (generally these schemes still allow extra money for those at retirement age and for disability benefits). On the face of it it sounds unaffordable, but according to a group of UK economists/some form of money boffins (sorry I can't find the article at the moment so sourcing this is a bit tricky) a citizen's income of £71 a week (about twice this for over 65s and somewhat less for 18-21 year olds) cost very close to the UK's current welfare system, although social housing costs and disability benefit would still be necessary here and I'm not sure if they were included in the cost of this scheme, I shall try to find the source.) Since you don't need to pay for means testing, check up with claimants investigate benefit fraud etc you simplify the system and reduce the cost of this welfare scheme. Evidence from Canada's 1970s mincome  scheme (all residents of the trialled area who fell below the poverty line were offered a guaranteed minimum income regardless of whether they were already in work) suggests that this sort of scheme also significantly reduces strain on health care and would see a decrease in crime rate, saving money from the central budget which could (no solid evidence here, just saying it could) make up for the extra cost of this scheme. Analysis of the mincome trial also showed that this scheme did not generally stop people seeking work (teenagers in education, mothers of newborns and those close to retirement did tend to choose not to work) although I'm not sure if average work hours decreased for those on this scheme.


The proposed benefits of this scheme are mainly that it would make the system fairer (no one would be financially better off out of work), would reduce stress for most of the working age population by acting as a safety net and by allowing the option of reduced working hours (which may well benefit employers also as this is associated with an increase in productivity) and would allow for more people to do voluntary work and suchlike. It would also mean a lot of people wouldn't have to work jobs they hate just to get by, but the flip side of this is that there are lots of unpopular low paid jobs and so this could cause a labour shortfall in these jobs.
The major criticism of this scheme is obviously the fear that people would just choose not to work, but it generally seems unlikely as £71 a week is not a huge amount of money, and the evidence from mincome seems to support this. I suspect this scheme would cause a drop in average working hours a week but this doesn't seem economically detrimental, and should help to reduce unemployment rates as well.


Personally I was very skeptical of this idea at first, but if it proves to be financially viable I'd be very keen to see it implemented. I expect that at some point in the future a system of universal income would be pretty much a necessity for the developed world since automatisation is going to continue to reduce the value of human labour, but as to whether it's a viable option in the near future I think we shall have to wait and watch these upcoming trials in Canada and Finland.
I apologise for the general lack of sources, but I am a terribly lazy human being.

[SaidaiSloth]

I was confused because I thought this was in the hidden  plaza..

[Pentagathus]

It is. Isn't it? Shouldn't it be?

[Jubal]

I think Sloth meant the Hidden Plaza and thought you were proposing universal income for Exilian...

Anyway... I'm not sure what I think of UI, I think my worries and criticisms over it are quite different to the ones you've got in the original post.

Firstly, it probably doesn't save that much on admin costs, because it's not high enough to make up for anyone losing housing benefit or disability allowances which still have to be worked out separately. If UI is done per adult it probably doesn't cover loss of child benefit either, so either it doesn't actually replace that many other benefits fully or some of the most disadvantaged people really, really lose out (or you set it absurdly high until you basically reach communism). You're potentially paying a lot of money to people who already have plenty, and I'm not convinced that the admin savings make up for that.

Secondly, suddenly the government is responsible for about six grand of income for every citizen in the country. That gives a huge lever to the government in power - part of the issues we got to in the 1970s in the UK were caused by "stop and go" economics where successive (mainly Tory) governments suddenly pushed everyone's spending power upwards dramatically in the year before an election so everyone would vote for them again. This would allow similar things and give the government an awful lot of power over people's incomes which I'm not totally comfortable with.

However, I do agree we probably need better basic rates of money coming in to households, and I'm certainly interested to see how these pilot schemes go. Something like a negative income tax I think might be a better system though, so basically if you're earning below a certain amount the state pays you a pop-up based on your earnings rather than vice versa. This makes for a much smaller amount of money being pumped through the bureaucracy that's better targeted in theory. I don't think either system should replace things like disability allowances though, because then disabled people just end up relatively poorer through no fault of their own.

[SaidaiSloth]

I may have forgotten that this is a plaza as well...

[Pentagathus]

Hmm I hadn't considered your second point, but surely that could be worked around by having the income set by an independent panel?
I think minimum incomes or negative tax schemes are unlikely to be popular enough to be implemented anytime in the near future. The argument that claiming benefits is more lucrative than actually working is made often enough already. And with a universal income you have a clear incentive to keep working towards higher earnings as you don't loose the income.

[Glaurung]

Surely the current UK tax credit system is exactly a "negative tax scheme"?

I'm quietly chewing over the other posts here, and once my brain is working again I'll try to respond.

[Jubal]

You can't have it set independently - firstly, the appointment of the panel will determine its political makeup, secondly it's a huge funding commitment, you can't have an independent panel come in and just demand the government massively changes its spending plans.

Glaurung - yes, sort of. An NIT scheme would replace (hopefully in a more streamlined way) both Working Tax Credit and the various unemployment allowances, WTC only applying to those meeting certain strict criteria at present and requiring someone to be working for a certain number of hours a week.

[Pentagathus]

Yeah fair point. Would it really be that much of an issue though? Because any party can already do pretty much the same thing by promising to lower taxes, increase tax credits etc and at the end of the day you have to rely on the public to be responsible when they vote and think about the long term implications. Granted it would probably be more tempting if people become used to citizen's income and would spread a metaphorical blanket over all voters but you would hope that the opposition would be able to point out the flaws of spending all yo money on giving people money.
Having said that I don't have much faith in people to be sensible with money so meh.

[Jubal]

I guess my feeling is that an NIT removes quite a lot of that extra throughflow/power whilst having basically the same effect.