Universal Basic Income

This is the idea of doing away with unemployment benefit, sickness benefit, and personal tax allowances, and replacing them with a non-means-tested income for all citizens. It would simplify bureaucracy enormously, and be an all-round Good Thing – it would eliminate absolute poverty, and ensure that people would always be better off if they took paid employment.

Concerned that we’d be giving extra money to people who are already very well off? It could easily be exactly balanced by an increase in their tax bill, with no extra administrative burden whatsoever.* (Obviously we wouldn’t be increasing the tax on those on low incomes.)

It would also eliminate the need for a minimum wage. This is because:

Employers should be happy – it’s effectively a state subsidy for them, like workfare in this respect, but without the total unfairness to the employees.

How would it be funded? It’s very nearly cost-neutral. The costs are almost exactly balanced by the savings in the benefits and tax allowances that it replaces. There’s also a substantial saving in administration. The only additional cost is the elimination of the poverty trap – which may be less than the saving in administration, and even if it isn’t, that poverty trap is a pernicious anomaly whose elimination would be well worth the relatively small cost.

Then there’s that little question of how to give a boost to the economy. Should you give money to the banks – that is, allow them to create money by making loans for more than the amount deposited with them (otherwise known as quantitative easing) – in other words, give money to the rich? Or should you give it to everybody, by way of an increase in Universal Basic Income? See Trickle Down Economics.

Commonsense says no? See my short piece Commonsense v. Careful Analysis. Careful analysis says yes.

I’ll tell you who really says no: the right-wing press and the right-wing establishment – who like the general population to be slaves, threatened with actual starvation if they don’t do as they’re told.

Update 2017: Scientific American!

See Brain Trust by Kimberly G. Noble in Scientific American, March 2017, p.36-41. “Poverty may affect the size, shape and functioning of a young child’s brain. Would a cash stipend to parents help prevent harm?” – “The idea of a universal basic income is gaining traction and is being piloted by several charitable organizations and governments around the world.”

* This is a general point. For example, there’s no sense denying bus passes to the well-off. Give them to every pensioner, and recover the additional cost of providing them for the wealthy in increased taxes on the wealthy. The reduction in administrative costs would probably be greater than additional cost of providing more bus services. If not, because the wealthy actually used the buses a lot, there’d be a worthwhile reduction in traffic. In fact, you could give them to everyone – you then wouldn’t need tickets or passes at all, saving on admin and materials, and perhaps most importantly, saving time and hassle for bus drivers and passengers.