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Editorial
Whenever
the political prospects for radical reform of tax and benefits
are discussed, and particularly the likelihood of any reform
which includes a Citizen's Income as a major constituent,
it is always said: such radical reform could not be achieved
within a single parliament so no government will ever even
think about it. (The same comments are made about major
transport infrastructure investment. No government wants
a future government of a different political hue to reap
the rewards generated by current spending.)
A
recent opinion poll might begin to change the tone of this
debate. The Fabian Society and YouGov have recently conducted
a poll amongst 2,506 electors and discovered that 54% want
political parties to have policies which will do good in
the long term and not just during the next year or two (a
figure higher than for any other characteristic: only 13%
of electors would support a political party because it had
firm ideological principles).
This
result suggests that parties in government will do themselves
good rather than harm by pursuing policies which will benefit
society in the longer term. So we look forward to the political
agenda changing, and to priority being given to those longer-term
issues which for too long have been neglected. In particular
we would like to see a Royal Commission on the options available
for tax and benefits reform. It will do the government no
harm.
Main
article:
The
truth the tables tell
If
you want to know what's going on in the world of benefits
reform then there really is no substitute for obtaining
a copy of the Tax Benefit Model Tables and spending a little
time understanding the tables and graphs of this excellent
annual publication. The April 2003 Tax Benefit Model Tables
(Department for Work and Pensions, 2003) are particularly
interesting because they show the full effect of the new
tax credits regime. Disturbingly, they reveal deep and broad
poverty traps which affect many types of family.
By
the 'depth' of the poverty trap we mean the extent of the
marginal deduction rate, i.e., the rate at which income
is withdrawn for any particular level of earned income.
So, to take the example below, a lone parent who is a private
tenant and who has one child under 11 experiences a marginal
deduction rate of 89.5% for any earned income within the
range £126.44 to £321.81. By the 'breadth' of
the poverty trap we mean the of earned incomes for which
there is a high marginal deduction rate: so here the breadth
of the poverty trap is defined by an earned income of £321.81
per week.
The
table shows the situation quite graphically:
Lone
Parent with 1 child under 11 , Private Tenant
|
Gross
earnings £
per week
|
Event |
Marginal
deducation rates |
| 21.89 |
Income
reduces HB/CTB |
85.0% |
| 81.33 |
CTB
disappears |
65.0% |
| 88.75 |
Tax
payable at 10% |
71.4% |
| 89.00 |
NI
becomes payable |
72.4% |
| 96.79 |
WTC
reduced by pay |
85.3% |
| 126.44 |
Tax
payable at 22% |
89.5% |
| 253.24 |
WTC
disappears/CTCreduced by pay |
89.5% |
| 321.81 |
HB
disappears |
33.0%
* |
| 595.00 |
NI
Upper Earnings Limit (UEL) |
23.0% |
| 675.29 |
Tax
payable at 40% |
41.0% |
| 956.28 |
CTC
family element reduced by pay |
47.7% |
| 1,104.34 |
CTC
disappears |
41.0% |
[*
We have corrected a mistake at this point. The table in
the publication has 70% here whereas the detailed tables
show that it should read 33%]
HB
= Housing Benefit
CTB = Council Tax Benefit
NI = National Insurance Contributions
WTC = Working Tax Credit
CTC = Child Tax Credit
What
is most disturbing about the tables is that it is families
with children which suffer the deepest and the broadest
poverty traps. All families with children (whether with
one parent or two) experience marginal deduction rates of
over 60% on gross earnings at least up to £300 per
week and often beyond £400 per week, and some family
types experience marginal deduction rates of over 80% on
gross earnings up to £300 per week. This situation
makes it difficult for families with children to lift themselves
out of poverty by earning more.
The
detailed tables in the publication make it clear that the
one benefit which both reduces child poverty and does not
contribute to marginal deduction rates is Child Benefit.
This is because Child Benefit is paid unconditionally, so
to increase it is to reduce child poverty because 1) it
increases the net income of families with children, and
2) it reduces the marginal deduction rates for families
with children and thus enables families to lift themselves
out of poverty by earning more.
The
detailed tables make it equally clear that the major culprits
in the deepening and broadening of poverty traps are Working
Tax Credit and Child Tax Credit. Whilst the motives for
their introduction were excellent (and they have indeed
reduced poverty for many families with children), their
long-term effects might be little short of disastrous because
they make it very hard for families with children to earn
their way out of poverty.
If
the government were looking for a way to continue to reduce
child poverty at the same time as increasing families' incentives
to increase their net income by improving their skills and
increasing earned income (good for them, and good for the
economy), then the obvious way forwards would be to reduce
tax credits and at the same time increase Child Benefit.
As
Rosalind Capisarow suggests: "There is a huge market
out there of between one and five million people who are
stuck between the welfare system and private enterprise,
with too much red tape and significant welfare disincentives
to progress. We need to redesign the incentives so that
the more effort people make the more advantaged they become."
**
Malcolm
Torry
** Rosalind Capisarow, Chief Executive of Street (UK), a
microfinance institution, in an interview reported in Voluntary
Sector, June 2003, p.16.
Response:
Philip Vince's second thoughts on the report Citizenship
and a Citizen's Income
In
our last edition we published a report on Citizenship and
a Citizen's Income in which the working party which prepared
the report recommended that the electoral register might
be used as the basis for entitlement to a Citizen's Income.
Philip
Vince writes as follows:
There
is no possibility that the electoral register will ever
be complete enough to be the basis for entitlement to a
Citizen's Income. Even though electors now have the option
to be excluded from the edited version publicly available
and to be included only in the full version to which access
is restricted, many people still fail to register. This
is a criminal offence, but it is rarely, if ever, enforced.
(Incidentally, some electoral registration officers have
found ways of including people with no address).
The
concept of finding out where everyone lives by canvassing
from door to door is irremediably flawed. This is demonstrated
by recent decennial censuses, in which it is estimated that
several hundred thousand inhabitants (about 1% of the population)
are unaccounted for. This has resulted in negotiations between
the Office for National Statistics and local authorities
to guess what is the real population of each area because
central government financial support is determined by this.
It is anarchic that the state does not know where so many
of its inhabitants reside. There are a few people, such
as women avoiding abusive ex-partners and witnesses threatened
in some criminal cases, who are entitled to keep their addresses
secret, but we must repudiate the notion of civil liberties
zealots that there is a right to privacy about where one
lives. I believe that in most other European countries there
is better information provided to government about changes
of address.
It
is essential that the database of names and addresses of
all residents is maintained continuously, not updated periodically
like the electoral register. The social security database
is the best source. For children under 16 omissions are
likely to be negligible. For the adult population it may
be less complete, even though it is now linked to the income
tax database to enable tax credits to be paid. The introduction
of a Citizen's Income could provide an incentive to anyone
who has avoided a social security record to be included
in future. However, payment will in most cases be made to
bank accounts, so that arrangements would still be needed
to ensure that all permanent changes of address were notified.
When deaths are registered, the social security authorities
have to be informed; maybe all permanent changes of address
should be registered, with similar social security notification.
The requirement for recipients of Child Benefit to have
been in the country for 26 weeks during the past year applies
to the mother, so it is almost always satisfied from the
date of the child's birth. It would not be sensible to require
legitimate migrants to the UK to wait six months before
they became entitled to a Citizen's Income.
The right to a Citizen's Income is linked to the duty to
pay tax on all other income, and therefore ought to be paid
to legally resident aliens as well as to those who have
British nationality (unless they arrange to pay tax to their
home country and not to the UK). There are complex Inland
Revenue rules about domicile and being ordinarily resident,
and the rules about entitlement to a Citizen's Income, and
indeed to citizenship, would need to be aligned with these
(though they would not necessarily need to coincide with
them).
The
Citizen's Income regime includes the replacement of contributory
retirement pensions by enhanced Citizen's Incomes for citizens
above certain ages. However, it is reasonable that payment
of these increases should be subject to residence for a
minimum number of years, perhaps twenty, in the UK or in
a country with which we have reciprocal arrangements. Conversely,
we should pay Citizen's Incomes to any who meet the UK's
residence requirements but have chosen to retire abroad
in countries with which we do not at present have reciprocal
arrangements.
Events
The
Tenth Basic Income European Network Congress in Barcelona
(19th and 20th September 2004)
The
Tenth Basic Income European Network Congress will be part
of The Universal Forum of Cultures (9 May - 26 September
2004) in Barcelona. This massive event will take place on
a new site currently under construction along the sea-front,
to the East of the Olympic village, about 4 km from the
city's old centre, with a good metro/bus/cyclepath connection.
The initiative of the Forum was taken by Barcelona's city
council and is expected to consist of an overlapping sequence
of 44 congresses (the "Dialogues" section of the
Forum), 24 exhibitions, 30 celebrations, 423 concerts, and
48 street shows. Five million visitors from across the world
are expected over the four month period. The organisers
describe the Forum's purpose as follows: "The profound
changes wrought by the globalisation process have brought
new challenges and opportunities which affect our present
and shape our future. The Universal Forum of Cultures provides
a meeting point and platform for dialogue, where people
from the world over can come together to look for solutions
and jointly tackle the questions addressed." The three
focal themes of the forum are "Cultural diversity"
("constructive dialogue among different peoples"),
"Sustainable development" ("new ways of growing
that respect natural resources") and "Conditions
for peace" (especially "respect for other cultures
and for the environment").
UNESCO
is co-sponsoring the event, but the bulk of the funding
is coming from the municipality of Barcelona, the autonomous
region of Catalonia and Spain's central government. There
will be a standard registration fee (in the range of EUR
60-80 for a four-day period) which would cover access to
all Forum events, a public transport pass, lunches and coffee
breaks. In addition, the Forum will organise accommodation
at discount rates in a broad range of hotels and university
residences.
The
Dialogue on emerging rights (18-21 September 2004) will
consist of five events under one general heading provisionally
formulated as 'Human rights, emerging needs and new opportunities'.
The BIEN congress will be one of these events under the
provisional title 'Right to basic income: Egalitarian democracy'.
The present plan is to have a part common to all five events,
namely the first day and the morning of the fourth, with
all participants of the separate events strongly encouraged
to take part in this common part, whose exact content remains
to be determined. The five separate events will take place
on the second and third day (Sunday 19 and Monday 20 September).
Simultaneous translation will be provided at the plenaries
for Catalan, Spanish, English and French. The daily timetable
for the sessions should be 9.30am to 1pm and 2pm to 5.30pm,
with people free to spend their evenings attending other
Forum events. BIEN's General Assembly should take place
on the evening of Monday 20 September. A local event on
basic income (in Catalan and Spanish, preferably in the
city centre) is due to be organised just before, namely
in the evening of Friday 17 September.
BIEN's
two-day Congress will combine, as usual, plenary sessions
with guest speakers (first morning and second afternoon)
and parallel workshops with volunteered papers (first afternoon
and second morning). The first session (Sunday morning)
will consider issues of principle (two sub-themes are being
explored: 'Family-friendly policy and parental wage' and
'Right to basic income and duty of reciprocity'), while
the final session (Monday afternoon) will consider prospects
for (important steps towards) basic income in the North
and in the South.
For further information on the congress contact BIEN on
bien@basicincome.org
or contact the Citizen's Income Trust.
Reviews
Jay
Ginn, Gender, Pensions and the Lifecourse, The
Policy Press, Bristol, 2003, 152pp, pb, 1 86134 337 X, £17.99,
hb, 1 86134 338 8, £45. Order this book Also in paper
back £17.99 Order
this book
There
are many ways to slice analytically the pensions question;
by slicing along the gender dimension the author has not
only exposed the key debates around this particular variable
but has thrown the whole messy area of pension reform into
sharp relief. Much of the problem with the pension debate
is, perhaps surprisingly, not ideological. Whatever side
of the political spectrum protagonists come from they have
similar desires to see reasonable income smoothing over
a lifetime and that the measures taken to ensure this are
efficient and, in some measure, equitable. While a lack
of consensus on what constitutes 'equity' is one of life's
political certainties, the pensions problem is racked with
many more uncertainties than the average political battleground:
the long time-horizon, the difficulties of balancing structural
incentives with broader freedoms and the avoidance of crippling
burdens on government. This latter especially, given the
knowledge that the markets in this area are prone to failure,
creates a complex series of interwoven problems. To sift
through the multiple dimensions is not easy. To have the
courage to de-emphasise some issues to achieve clarity and
to guard the analytical capacity to aid understanding is
a rare skill that is ably demonstrated in this book.
A
great deal of the text and figures is given over to an efficient
yet highly readable précis of the recent history
and current state of the pension arena in the UK and, occasionally,
other countries. This is far from being merely a quick rehash
of old material, nor is it of limited use due to the focus
on the gender dimension. There is a purposefulness and clarity
about the material that is often missing in more general
works. The tables are especially well presented with the
complexity of the data and the referencing of sources being
acknowledged but without becoming troubling or intrusive.
Unlike many books of this kind it is well enough presented
to 'dip into' with the attention being caught by well chosen
and presented data that then lead on to a deeper analysis
in the text.
Where
the work really scores for me, as a student of political
science and former policy maker, is in its head-on approach
to the reality of problems. Thorny issues such as miss-selling,
the systematic failure of private pensions for specific
groups and the scale of information failure are handled
impressively. The issues are neither glossed over nor lingered
on unnecessarily - they are given their place within the
analysis and addressed in an illuminating manner. Direct
criticism is rare and is reserved mainly for failures to
take account of what should have been stunningly obvious
at the time and not only in retrospect.
This book is for anyone who has an interest in the equity
issues of pension reform, offering as it does not just a
specific analysis on gender but a model for many analyses
of a similar nature. The only people who might find they
are skipping chapters are those who have read, inwardly
digested and understood an impressive range of Organisation
for Economic Co-operation and Development, Department of
Work and Pensions and Office for National Statistics statistical
publications - but it is to be hoped that even experts can
appreciate new presentations and different emphases of such
data.
The
broad conclusion that emerges from the work is that policy
makers must take notice of the gender issues. There have
been major changes in social roles and labour market involvement
for women both flowing upward from social change and imposed
downward by evolving government policy, but what becomes
clear in the final account is that the system that failed
women of a previous generation will, even after reform,
do no better in giving women the security in old age that
all citizens deserve. Pension strategies across all spheres
need to be examined and adapted so that tomorrow's generation
of taxpayers will not have to pay for today's failures.
Without action today such failures are fated to fall on
the governments whose predecessors ignored them.
Stuart
Astill, LSE.
Former
economic advisor and policy analyst, Department of Work
and Pensions.
Andrew
Reeve and Andrew Williams (eds.), Real Libertarianism
Assessed: Political Theory after Van Parijs,
Palgrave Macmillan, London, 2002, 240pp, hb, 0333912675,
£50. Order
this book
This
is a collection of essays discusses the political writings
of Philippe Van Parijs, who is best known for his advocacy
of basic income (BI) in Real Freedom for All: What (if
anything) can Justify Capitalism (1995). Inspired by
the works of Rawls and Dworkin, Van Parijs defines a philosophy
which he calls 'real libertarianism', which holds that the
most just society is the one that maximizes the least advantaged
individual's 'real freedom' - the freedom to do whatever
he or she wants to do. Van Parijs argues that an unconditional
basic income would maximize the real freedom of the least
advantaged, and that the productivity of capitalism, harnessed
to provide the highest sustainable basic income, could justify
capitalism. Before reaching that conclusion he discusses
the issue of whether basic income would exploit workers
and how society should compensate for disadvantages such
as handicaps.
The
essays in Real Libertarianism Assessed provide a
valuable and in-depth evaluation of Van Parijs's theories.
All the authors agree about the quality and value of Van
Parijs's work, although some disagree substantially with
his conclusions and make important criticisms.
Cunliffe, Erreygers, and Van Trier trace the origins of
the basic income idea to Joseph Charlier, writing as early
as 1848, and Mabel Milner, Dennis Milner, and Bertram Pickard,
writing in 1918-1920. These authors offered justifications
for BI that differ substantially from Van Parijs's. They
derived the right to BI from a right to use the land to
produce one's own subsistence. Although equal claim to land
as one of many "external assets" is important
to Van Parijs, he explicitly rejects any justification for
BI based on a need for subsistence.
Peter Vallentyne clarifies and criticizes Van Parijs's use
of the principle of self-ownership, which Van Parijs uses
in a much more limited way than traditional libertarians.
Vallentyne believes Van Parijs is right to deny that self-ownership
includes a right to appropriate natural resources, but that
he goes too far when he denies that self-ownership includes
the right to benefit from one's own brute luck advantages,
such as being more physically able and therefore more productive.
Brian
Barry, although a supporter of basic income, raises very
difficult questions about Van Parijs's justification of
it, the most difficult being that the concept of real freedom
is too weak to justify basic income. According to Van Parijs,
real freedom is the ability to do whatever one might want
to do regardless of whether one actually wants to do
it. Therefore, Barry argues, two different opportunity
sets can only be ranked against each other if one dominates
the other. That is, only if set A has all the available
options in set B plus more, can we say that A has more real
freedom than B. But imagine a society in which everyone
faces the same budget constraint, and the government wants
to impose either a guaranteed job or a guaranteed income.
Basic Income would give people some combinations of labour
and leisure that would be unavailable with a guaranteed
job, but the guaranteed job would probably also offer other
combinations of labour and leisure that would be unavailable
with a guaranteed income. Therefore neither of them necessarily
has more real freedom than the other, making it extremely
difficult to build a case for basic income from the point
of view of maximizing real freedom.
Robert
van der Veen responds to Barry's criticism by saying that
in his example everyone faces the same budget constraint,
and are all equal in terms of real freedom to begin with.
This response is inadequate, however, because Van Parijs
argues not that real freedom should be equalized, but that
it should be as high as possible. Even though we can tell
real freedom is equal in this community, we cannot tell
whether this community has more real freedom with or without
BI. Van der Veen goes on to argue that BI could offer more
real freedom than a guaranteed job would, but that is an
empirical question which is very difficult to answer conclusively
using only deductive reasoning.
Arneson attacks BI's ability to deliver real freedom rather
than real freedom's ability to justify a universal BI. As
he puts it, "Making the BI grant as high as possible...would
include...individuals who are above average in the real
freedom they enjoy, but who happen to have a strong preference
for leisure over income-generating activity. The redistribution
policies that society establishes could do more to advance
the real freedom of the least advantaged if they were better
targeted at the least-advantaged." This is a question,
I believe, which real libertarians will have a hard time
answering.
Andrew
Reeve and Stuart White are critical of basic income in general
because they see it as potentially allowing non-workers
to live off, and so exploit, workers. However, they both
write chapters which are quite sympathetic to Van Parijs.
Reeve questions van Parijs's inclusion of jobs as part of
his list of "external assets that can be taxed without
exploiting self-owning individuals," but he believes
this argument only reduces the potential size of the basic
income, not its validity. White's chapter promotes a principle
of 'fair reciprocity' in which individuals owe society a
productive contribution in exchange for a high minimum share
in the social product. Basic income, he says, would allow
a very important breech in this principle. People who live
off a level of basic income that requires effort on the
part of others to sustain should feel obliged to fulfil
a reciprocal obligation to contribute to that effort. BI
does not hold people to that obligation. But he argues that
it does have several reciprocity-enhancing effects on equal
opportunity, enabling non-market contributions to the social
product, the reduction of domestic abuse, improved job quality,
and serving as a residual safeguard against brute luck disadvantage
and market vulnerability. Thus, he concludes, a modified
basic income such as a time-limited BI or a participation
income combined with a basic capital grant could be part
of a reciprocity-focused system.
Hillel
Steiner focuses on the internationalization of real libertarian
issues, and Thomas Cristiano writes on Van Parijs's theory
of voting rights. In the concluding chapter Van Parijs directs
his response mostly to these last critics.
Overall
this book serves to examine critically the implications
of real libertarianism laid out in Real Freedom for All,
and is an essential read for anyone interested in the philosophical
case for and against basic income.
Karl
Widerquist, New York and Oxford
Stuart
White, The Civic Minimum: On the Rights and Obligations
of Economic Citizenship, Oxford University Press,
Oxford, 2003, 300pp, hb, 0198295057, £25. Order
this book
Stuart
White, of the University of Oxford, is a rising star in
political theory. Over the past eight years, he has written
more than a half dozen articles on the "reciprocity
objection" to basic income. Fair reciprocity, as White
defines it, states that all those who enjoy a high minimum
share of the benefits of social cooperation owe a corresponding
obligation to contribute to that society in return (p.17).
This point of view seems antithetical to basic income, but
White is sympathetic to the arguments of basic income advocates,
and he is concerned to find a policy that balances the concerns
of both sides.
White's
new book, The Civic Minimum, brings together many
of the themes from his articles into a coherent theory of
a social system, laying out the rights and obligations that
follow from his theory of "justice as fair reciprocity."
It is not a book about basic income but one in which the
basic income debate features prominently in a discussion
of how to organize an economic system in accord with basic
principles of justice. It manages to discuss these issues
at a high level of political theory while still being compelling,
interesting to read, and closely connected to the current
policy debate.
Fair
reciprocity, as defined by White, has three characteristics:
First, citizens have social rights. Second, these rights
are instrumental to a radically egalitarian distributive
goal. Third, "Where these rights secure a citizen a
sufficiently generous share of the social product, and sufficiently
good opportunities for productive contribution, citizens
have definite, and potentially enforceable, obligations
to make a productive contribution to the community in return"
(p.17). In its ideal form, fair reciprocity must be made
in the context of institutions that fully correct for unequal
access to the means of production and to inequalities of
natural ability, but, as White recognizes, this is impossible
to achieve fully. In its non-ideal form, fair reciprocity
demands only that society satisfies a threshold of equal
opportunity. It needs to eliminate the proletarian condition
by minimizing class inequality and by ensuring that every
citizen has access to jobs that give them above-poverty
wages, opportunities for self-realization, and security
against abuse and vulnerability (p.19). Where this threshold
of basic fairness exists, citizens are obliged to reciprocate
the benefits they get from society with a productive contribution
in the form of socially desirable paid labour or at least
some unpaid work such as care-giving (p.18). This obligation
exists not only for recipients of government transfers but
also for everyone who benefits from social cooperation,
including those most advantaged in the market. It implies
that there can be no work requirement unless all able-bodied
people, both rich and poor, are equally held to it (pp.136-137).
White
finds no strong moral case for a universal unconditional
basic income (p.168), but he does find several strong instrumental
(or practical) arguments for basic income even from the
standpoint of fair reciprocity. First, the reduced need
for workers to rely on their wages for day-to-day survival
could improve the flexibility of the labour market, leading
to higher levels of employment and increased employment
opportunities for everyone. Second, basic income could function
as a social wage for people who make productive contributions
that aren't adequately compensated by society. Third, by
making non-earning parents financially independent BI could
reduce domestic exploitation and abuse. Fourth, basic income
would put employers under pressure to improve job quality,
increasing opportunity for self-realization in work. Fifth,
BI would function as a residual safeguard against significant
brute luck disadvantage and market vulnerability which a
non-ideal system of fair reciprocity might fail to eliminate
(pp.166-168).
These
last two practical arguments are, I believe, very much in
tune with the reasons which lead many basic income supporters
hold the position they do, and they are very closely connected
with White's arguments for what constitutes non-ideal fair
reciprocity. As he puts it, "Vulnerability arises from
the pressing need to sell one's labour power. If, however,
individuals have a source of income that is independent
of the immediate sale of their labour power…they need
not suffer the acute dependency, and corresponding loss
of freedom, characteristic of the proletarian condition"
(p.132).
However,
White does not believe these arguments for basic income
are decisive because there may be other policies that could
achieve these goals without having the undesired effect
on reciprocity (pp.169-170). He cites an excellent quote
from Leonard Hobhouse: "It seems sometimes to be regarded
as quite a providential arrangement that some should be
born without the necessity of working for their own living
so that they have leisure to impose this fundamental duty
on others." Those who do not view this arrangement
as providential tend to break off into two camps, those
who want to relieve everyone of this duty to work and those
who want to find a fair way to enforce the duty to work
on rich and poor alike. White's book is largely an exploration
of the second strategy.
White
justifies his use of the second strategy by making several
strong arguments that basic income supporters will find
difficult to answer. Three of these stand out in importance.
First, he argues that fair reciprocity follows from and
encourages a belief in democratic mutual regard. If one
group seems to benefit from the work of others without contributing
themselves, they break the feelings of solidarity that make
commitment to a generous social system possible.
Second,
he argues that there is a direct connection between reciprocity
and work, which has great intuitive appeal, and which is
best summarized by a quote from a recent article:
"Imagine,
for example, that we institute a 'social right' assuring
all citizens of a decent minimum of income. If, as a citizen,
I accept that there is such a right-and that it is an
equal right held by all citizens, not merely a privilege
peculiar to me-then I must also accept that each citizen,
myself included, has a correlative obligation to help
sustain the scheme that will assure citizens of this level
of income. … If assuring citizens of this level of
(real) income requires that work be done, then, as part
of my obligation to help sustain the scheme for assuring
citizens of this income, I surely have a prima facie obligation
to share in this work." 1
Third,
he criticizes those who argue that a justification for basic
income can be built on the observation that much of the
pay for jobs is actually a rent from either the imperfect
market for those jobs or on the technology that mixes with
labour. The "jobs as assets" argument was pivotal
to Van Parijs's influential case for the highest sustainable
basic income, but White makes a strong rebuttal. True as
it may be that part of the return to labour is a rent, he
argues, output still requires work and it makes sense to
divide the output amongst those who are willing to work.
He uses an excellent example to illustrate his claim (161-162).
He specifically applies this example to technological rent,
but by analogy it demonstrates a weakness in the entire
'jobs as assets' argument. Two people are shipwrecked and
spend a day swimming and unsuccessfully trying to catch
fish with their hands. The next day they wash up on an island
where a previous generation of inhabitants left an abundant
supply of fishing equipment. One fishes all day. The other
refuses to fish, but asks for half of the catch at the end
of the day citing the fact that the entire catch is attributable
to a rent on their joint property-the land and technology-without
which her labour was useless. Such a claim is as obviously
weak as it is obviously true. It is similarly weak for someone
to claim the rental portion of the wages on jobs they refuse
to perform. Van Parijs argues that society should be neutral
between people with different preferences for labour, but
White replies that neutrality does not trump other demands
of justice, and that a preference for living off someone
else's efforts could be just such a preference (pp.158-159).
There
are three general ways in which Basic Income supporters
could answer White's challenges. One is to argue that fair
reciprocity is not an important principle of justice or
at least that there are other principles of social justice
that are more important. Another is to accept reciprocity
as a value, but argue that it does not conflict with basic
income because, for example, the case for basic income derived
from the value of assets is stronger than the version of
that argument he addresses in this book, or empirically
that no one will fail to contribute. A third response would
be to accept the reciprocity principles which imply that
everyone should work but to make the instrumental case for
basic income strong enough to make it acceptable on balance
despite its negative side-effects on reciprocity.
One instrumental argument against White's case for enforced
reciprocity is to note the huge complexity of the system
he builds to combine the enforcement of reciprocity with
concerns for fairness towards the people who are being held
to that obligation. Reading through the book reveals an
extremely long list of policies:
1.
Some mechanism to ensure that private and public employment
actually benefits society as a whole, or at least to ensure
that people who perform such work do not benefit from
a civic minimum (pp.98-108)
2.
Legislation to establish a basic work expectation in terms
of hours worked (p.114), which-if possible-should be higher
for the more advantaged than for the less advantaged (p.116)
3.
Legislation to stipulate that people work some minimum
percentage of their peak-ability wage rate if possible
(p.114), including people with significant non-labour
income (pp.136-137), with exemptions for the handicapped
and for care-givers (p.115)
4.
A mechanism to oversee the unemployed to make sure that
they prepare for and look for work (p.116)
5.
A mechanism seriously to limit the returns to capital
to the level that represents genuine sacrifice (pp.118-124)
6.
A bill of rights for welfare recipients including a reasonable
right of refusal of unacceptable work offers and guarantees
that the work obligation will be productive and not punitive
(pp.141-143)
7.
A bill of rights for the children of welfare recipients
so that they are not burdened by the sanctions to enforce
their parents' work obligations (144-145)
8.
A time-limited basic income (pp.173-174)
9.
An inheritance and gift tax on the part of a recipient
at a very high rate, possible at 100% for transfers above
a lifetime limit unless such a level of taxation proved
to be counter-productive (pp.180-186)
10.
The wealth tax would be linked to a two-tier capital grant
system including a "participation account,"
for which funds could be used only for purposes linked
to productive contribution to the community such as education
and setting up a business, and a "life account,"
which would essentially be a time-limited basic income
(pp.191-192). The participation account would in turn
require a regulatory body large enough to oversee how
every citizen used these funds
11.
Possibly a "community fund" in the form of collective
share ownership to help finance the capital grant system
(pp.197-199, 205)
12.
In-work benefits for the low paid including a minimum
wage and child-care subsidies (p.202)
13.
Conditional but generous welfare programmes in the traditional
welfare state mode (pp.203-204)
14.
Equal opportunity programmes for education and anti-discrimination
policies in the work force (p.204)
15.
Possibly a childhood privilege tax-subsidy scheme (p.204)
16.
Possibly an employer of last resort (p.205)
17.
Possibly subsidies for temporary employees (p.205)
18.
Possibly public pensions (p.205)
All
of these programmes would be expensive. Most of them would
require a large bureaucracy with a very large overhead cost,
so that the taxes needed to support the system would be
much greater than the benefits received by those in need.
The complexity would also create obvious disadvantages in
terms of transparency and understandability. Some of the
policies (such as the requirement that even those who have
saved a sufficient amount of money must work a set number
of hours) seem unenforceable without a rather harsh regulatory
system.
Compare
White's proposal to Anthony Atkinson's basic income/flat
tax proposal, 2 which would replace all these programs (except
the equal opportunity provision) with one tax and
one benefit in a system that would require minimal
bureaucratic administration. The Civic Minimum is not a
moderate alternative to basic income but a far more radical
restructuring of the entire economy.
The
complexity is necessary to make sure that people at all
points in the economic hierarchy follow the norm of fair
reciprocity. Some restrictions are to make sure that recipients
of public benefits fulfil their obligations, others are
restrictions on people with higher incomes which are necessary
because White recognizes that society cannot force the poor
(through their vulnerable condition) to work for a system
that is not fair to them. This turns out to be an enormous
task requiring items 2, 3, 5, 9, and 10 on the list above.
To build a system fair enough to demand such participation,
he has to attempt to build capitalism without unearned income,
if such an ambition is possible. White seems to admit that
the confiscatory levels of income and capital taxes needed
to assure that no one lives without work would be unsustainable,
and we well have to accept that some wealthy people will
live comfortably without working. If this is the correct
interpretation, why then is it so important to make sure
that not one recipient of transfers lives without working?
Why does solidarity allow the better off to demand that
every single able-bodied person on the minimum works, but
solidarity does not allow those on the minimum to demand
that every single person above the minimum works? If this
is not the correct interpretation, are we really ready to
accept the radical changes that would be necessary to ensure
that our society has no people so rich that they need not
work? Do we really know how to do that? For those of us
who believe that the belief in "striking it rich"
is the linchpin of capitalism, it does not even seem possible.
What
do we get for all of this complexity? Apparently, the benefit
appears to be that it allows society to exclude those few
who don't meet their obligations of fairness. The system
is nearly as universal as basic income; a relatively small
number would be left out and only after many second chances.
But what happens to them? White argues convincingly that
the Civic Minimum is universal in the sense that there is
universal access to it for people who are willing to fulfil
their obligations (138). But, as extensive as White's policy
prescriptions are, he does not answer the question of what
to do with people who fall below the minimum; nor does he
argue that there will be no such people. Should there be
a sub-minimum for non-reciprocating indigents or should
nonworking homeless people be left to fend for themselves
somehow until they wise up and enter the system? He mentions
an unconditional right to access to land but concludes that
a case for unconditional benefits based on it is incomplete
(168), and I do not understand what he intends those who
stand outside of the cooperative obligation to have. Basic
income, by contrast, would pick these people up into its
universal benefit. The fact that fair reciprocity can exclude
people is supposed to be an advantage. Certainly, a society
putting non-ideal fair reciprocity would have far fewer
homeless than the present system, but is the great advantage
of the civic minimum over basic income that when we pass
beggars in the street, we will know that in the context
of a basically fair though non-ideal system, there is an
acceptable likelihood that they deserve to be beggars? Or
should the already lengthy list of programs be enlarged
to include the services for non-reciprocating indigents?
Karl
Widerquist, New York and Oxford
Notes:
1.
Van Parijs, P. (1995). Real Freedom for All: What (If
Anything) Can Justify Capitalism? Oxford, Oxford University
Press.
2.
Atkinson, A. (1995). Public Economics in Action: The
Basic Income/Flat Tax Proposal. Oxford, Clarendon Press.
References:
Atkinson,
A. (1995). Public Economics in Action: The Basic Income/Flat
Tax Proposal. Oxford, Clarendon Press.
Van
Parijs, P. (1995). Real Freedom for All: What (If Anything)
Can Justify Capitalism? Oxford, Oxford University Press.
White,
S. (2003). The Civic Minimum. Oxford, Oxford University
Press.
White,
S. (2003). 'Fair Reciprocity and Basic Income'. Real
Libertarianism Assessed. A. Reeve and A. Williams. New
York, Palgrave MacMillan: pp.136-160.
Tony
Fitzpatrick and Michael Cahill (eds.), Environment and
Welfare: Towards a Green Social Policy, Palgrave
Macmillan, Basingstoke, 2002, xii + 226 pp., hb., 0 333
91984 X, £45.00. Order
this book
The
editors' introduction debates the meaning of 'sustainability'
and posits three possible ways in which demands and resources
can be more evenly matched: "The first way (weak sustainability)
is to expand the stock of resources. This can be done by
replacing renewable resources, by substituting for non-renewable
ones and by searching for technological solutions to depletion
and pollution. A second way (strong sustainability) is to
revise the demands that we make on the world so that, for
instance we consume far less. So, rather than adapting the
world to suit ourselves we adapt ourselves to meet the finitude
of nature. The third way (moderate sustainability) is to
combine elements of those two approaches. Each of these
implies a subtly different conception of sustainability"
(p.3). The question follows: Are existing welfare systems
compatible with any of these definitions ? - for current
welfare systems are based on the notion of economic growth
and on productivist policies, and they themselves contribute
to unsustainability; and the editors identify welfare systems'
relationship to wage-earning as an important part of the
problem. As Fitzpatrick and Cahill conclude: "Welfare
states have developed in concert with an employment society"
(p.9).
The
following chapters offer a variety of perspectives on the
relationship between ecological concerns and economic and
welfare systems and their possible reform. John Barry suggests
that the ethical basis for a sustainable society is already
in place, and that what we need to do is put it into practice;
Matthew Humphrey describes 'Green ideology' as "a full
fledged, independent ideology" (p.59) with distinctive
practical outcomes - such as a Basic Income; Michael Cahill
stresses the importance of the local; Tim Jackson asks how
we might get from where we are now to a more sustainable
social policy without doing new damage along the way - for,
whilst a recession would result in fewer natural resources
being consumed, it would also cause social damage; Meg Huby
concentrates on public utilities and government's role in
her discussion of the sustainable use of resources; Colin
Williams discusses Local Exchange and Trading Systems (LETS)
and the social economy in general; and Adrian Little discusses
a possible conflict between the rights-and-responsibilities
argument for working time reductions and the responsibility-to-future-generations
perspective of Green ideology.
Tony
Fitzpatrick's first contribution is a more theoretical chapter
on ecosocial welfare as a thought-experiment which goes
beyond liberal democracy; his second is a thorough discussion
of a Citizen's Income (called here a Basic Income). In many
ways this is a summary of his excellent Freedom and Security:
An Introduction to the Basic Income Debate (London:
Macmillan 1999), but it is constructed around the reasons
which Greens might offer for either supporting or opposing
a Basic Income - for instance: a Basic Income "guarantees
a minimum income for all and challenges the employment ethic,
but it also seems to depend upon the ecologically very damaging
activities to which Greens object" (p.150). The chapter
concludes with a call for Greens to mobilise behind short-term
aims as well as long-term ones, and recommends that one
of those short-term aims should be a Citizen's Income.
The
book's final chapter is by James Robertson, who recommends
eco-taxation as a means of funding a Citizen's Income, and
recommends both eco-taxation and a Citizen's Income as means
towards a more sustainable society.
This
is a thought-provoking book, and should be read by anyone
interested in a sustainable society - for in fact it is
more about that than it is about welfare systems. The fact
that a Citizen's Income is the subject-matter of one chapter
and is given a thorough airing in three others speaks for
itself. If the book's contributors had stuck more firmly
to their brief of relating the environment to welfare, then
we would have had a book at the heart of which would have
been a strong argument for the Citizen's Income route to
benefits reform.
Jonathan
Bradshaw (ed.), Children and Social Security,
Ashgate, Aldershot, 2003, 284 pp., hb., 0 7546 3164 8, £42.50.
Order this book
This
book originated as papers written for a Foundation for International
Studies in Social Security Conference on Children in Social
Security in 2001, and it is thoroughly international in
its content. The first part contains international comparisons
of child poverty: on why child poverty is higher in the
US than in Europe; on the UK, and the importance of surveys
of children's poverty as well as of family poverty; on Sweden,
and the necessity of a spending-power measure of poverty
when average income falls; and on Belgium, and the different
ways in which family income can be measured.
The
second part is on different cash benefit packages for children:
in Anglo-American countries, and in New Zealand. A final
chapter in this section studies cash benefits for children
as inter-generational payments in a context of demographic
change.
A
third section is a miscellany entitled 'Other Aspects of
Social Security Provision for Children'. Family obligations
in Asia, the Child Support Agency in the UK and its equivalent
in the USA, benefits for children and their carers in South
Africa, the costs and benefits of childcare services in
Switzerland, and the satisfaction levels of parents of children
with disabilities, are all thoroughly discussed.
Conference
papers are necessarily diverse, because their subject-matter
reflects the interests of their authors and because conference
organisers rarely exercise editorial control - and this
collection is certainly diverse. Professor Bradshaw has
provided an 'Introduction and Overview' at the beginning,
and this provides a sense of cohesion. It might have been
interesting if he had also supplied a concluding chapter
suggesting, on the basis of the evidence contained in the
papers, what kinds of benefit regime would be most likely
to reduce child poverty. His views on the effects of higher
rates of universal benefits (such as the UK's Child Benefit)
would have been informative.
There is no index, which is a pity.
Frank
Field, Welfare Titans: How Lloyd George and Gordon Brown
Compare, and other essays on welfare reform,
Civitas, London, 2002, 77 pp, pb, 1 903 386 20 9, £4.
Order
this book
Frank
Field was Director of the Child Poverty Action Group and
of the Low Pay Unit before becoming MP for Birkenhead in
1979. From 1997 to 1998 he was Minister for Welfare Reform,
and before, during and after that brief spell in government
he has tried and tried again to get social security reform
further up the public agenda. His message has always been
that means-testing is bad for people; and if you want to
know why means-testing is bad for people, then read this
book.
The
chapter which will most interest readers of this Newsletter
is chapter 4, entitled 'Lloyd George and Gordon Brown: How
the Welfare Titans Compare'. The chapter is well summarised
in the introductory essay, and it is worth quoting this
summary at length:
"The
fundamental difference between these major figures as
Chancellors of the Exchequer derives from what they see
as the goal of welfare reform. Gordon Brown has an essentially
one-dimensional view where the object of his tax credit
strategy is to increase the income of the poor. This is
no mean objective.
"Its
limitations, however, become quickly apparent as soon
as Lloyd George's dual objectives in welfare reform are
considered. Lloyd George shared Gordon Brown's objective
of channelling more money to the poor. But of equal importance
to Lloyd George was the objective of combining increases
of income for the poor with extending their freedom.
"Gordon
Brown's strategy achieves the opposite. Indeed, in a cruel
paradox, the more money that goes to the poor by way of
means-testing, the greater is the restriction on their
freedom. Tax credits make it impossible for a growing
army of individuals to improve their family's income and
well-being by working harder or longer or gaining additional
qualifications" (pp.4f).
The
chapter itself is a mine of historical and contemporary
information and of relevant comment and is a powerful argument
for work-incentives. Gordon Brown's tax credits will provide
such an incentive in the first year of the scheme - but,
as Field correctly notes, "in welfare it is the long-term
impact of policies which is of key importance" (p.54),
and, with Brown's system, "once a person is into the
tax credit system, few will be able by their own efforts
to escape" (p.57). Ironically, a new welfare dependency
has been created by the government which said that it intended
to end such dependency, and Brown has created a ceiling
and not the kind of floor on which people can build, which
Lloyd George created with his contributory pensions and
Trade Union administered unemployment benefits.
Whilst
chapter 4 is somewhat negative in tone, because it is an
argument against means-testing rather than an argument for
a solution, chapter 2 is more positive. It is equally against
means-testing, and particularly against the pensioners'
minimum income guarantee (and now its replacement by a tax
credit), but it also makes a recommendation: a stakeholder
pension to which people have to contribute. Elsewhere, Field
recommends that the value of tax credits should be frozen,
tax rates reduced, and a higher state pension introduced,
as a means of reducing people's dependency on means-tested
benefits, and he concludes: "That welfare reform has
to be built so that it works with the grain of human nature
- of directing self-interest so that it promotes work, savings
and honesty - is a lesson which [he] thought had been learnt
before Labour's 1997 election win. That lesson will have
to be learnt again, but this time in the wake of a collapsing
tax credit system" (p.7). The argument clearly leads
in the direction of universal benefits (for there can be
no firmer 'floor' than automatic, nonwithdrawable benefits
such as Child Benefit), but these don't get a mention. This
is a pity. If Field doesn't like this particular option
for reducing the influence of means-testing then somewhere
in a book like this he should at least have told us why
he doesn't like it.
There is some fascinating historical material in this short
book, on education and health care as well as on income
maintenance strategies, and there is some equally fascinating
political theory, particularly relating to the freedom of
the individual citizen. The Institute for the Study of Civil
Society is to be commended for publishing this collection
of lectures and papers, and Frank Field is to be congratulated
for writing what's in it. It's only a pity that he didn't
remain a bit longer in government, and particularly that
he wasn't there long enough to prevent the extension of
means-testing which tax credits represent.
Guy
Palmer, Mohibur Rahman and Peter Kenway, Monitoring poverty
and social exclusion 2002, Joseph Rowntree Foundation,
2002, 110 pp., pb., 1 85935 074 7, £16.95. Order
this book
This
is the Joseph Rowntree Foundation's fifth annual report
on levels of poverty and social exclusion in Great Britain.
The report contains statistics related to fifty indicators
covering income, health, education, employment and engagement
in community activity. The first chapter contains pages
on income measures, then come chapters on children, young
adults, adults, and older people, and a final chapter on
communities (with material on involvement in civic organisations,
crime, proportions of households without insurance, etc.).
The income indicators show that there has been a small drop
(of 300,000) between 1999/2000 and 2000/2001 in the number
of people on incomes below 60% of median income, and that
we are now back at the 1995/6 level. This is welcome. But
at 12.9 million the figure is double what it was 20 years
ago. (This rather suggests that the Foundation's sister
organisation, the Joseph Rowntree Charitable Trust, ought
to replace its recently discontinued poverty programme with
one aimed at long-term issues relating to income distribution).
As always, this report is highly informative, extremely
clear and accessible, and of considerable practical value
to policy-makers and all involved in policy debates.
©
Citizen's Income Trust 2004
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