recent publication, The Spirit Level: Why More Equal
Societies Almost Always Do Better, by Richard Wilkinson
and Kate Pickett (Allen Lane, 2009), identifies some of
the ill effects of unequal incomes. These are literally
ill effects, because by amassing vast quantities of data
on incomes and health the authors have convincingly shown
that inequality breeds ill health, and particularly poor
psychological health. Japan and Scandinavia experience the
lowest inequality and also the best psychological health.
Portugal, the USA and the UK boast the highest inequality
and the worst health outcomes and social problems. What
is particularly interesting is that in unequal societies
such problems afflict the rich as well as the poor.
authors suggest that the situation could be remedied both
by making earned incomes less unequal (for instance, through
changes in the National Minimum Wage and in the management
of companies) and by redistributing incomes after they've
Citizen's income would of course tackle the problem from
several directions at once:
would provide an automatic income floor and thus reduce
the anxiety which the authors identify as prevalent in
would redistribute income from rich to poor (and a particular
scheme which the Citizen's Income Trust has costed (Citizen's
Income Newsletter, issue 3 for 2004) showed increases
of 25% in the incomes of the lowest earnings decile and
decreases of 4% in the incomes of the highest, and a smooth
curve between the two);
it would reduce social inequality by treating everybody
the same (rather than, as at present, treating people
on means tested benefits and tax credits in one way and
people paying income tax in another).
we are serious about ending the inequality which is clearly
such a blight on the health of our society, then such a
feasible and desirable option as a Citizen's Income really
does need to be given a try.
Citizen's Income for All?
report on a seminar series co-ordinated by the Citizen's
by Jurgen De Wispelaere and Anne G. Miller
February and March of 2009 the Citizen's Income Trust organised
a series of academic seminars on the theme of 'A Citizen's
Income for All?', in close collaboration with four UK universities.
The purpose of the seminars was to showcast recent developments
in research around universal income maintenance proposals
and, along the way, giving another boost to the idea that
citizen's income (CI) schemes are a policy worth considering
in the UK context, a task to which CIT has devoted much
effort in the past two decades.
were delighted that our plans were greeted with much enthusiasm
by a number of academic departments across the UK, who were
eager to host a CIT talk as part of their regular seminar
series. In the end four events were scheduled to take place
in Newport, York, Nottingham and Belfast. Unfortunately,
Tony Fitzpatrick's talk on 'Basic Income and Paternalism',
due to take place on 10th February at the University of
Wales, Newport, had to be cancelled due to a snow storm.
The three other talks, however, went ahead as scheduled,
and brief reports on each can be read below.
like to take this opportunity to thank the conveners of
the research seminars for their enthusiastic and efficient
collaboration: Gideon Calder (University of Wales, Newport),
Louise Haagh (University of York), Tony Fitzpatrick (University
of Nottingham) and Keith Breen (Queen's University Belfast).
And of course our thanks also go to the four speakers, who
in each case prepared thought-provoking papers: Tony Fitzpatrick,
Bill Jordan, Louise Haagh, and Stuart White.
Bill Jordan (University of Plymouth), 'Citizen's Income
and the Crash: Credit, Debt and the Citizen's Income', held
on 4th March 2009, University of York.
his talk Bill Jordan presented a wide-ranging discussion
on the nature of banking, credit and the National Debt.
He compared the current crisis with that of the late 1920s,
and asked whether distributing a Citizen's Income (CI) might
not have had a better effect on stimulating the economy
than paying the banks. Bill queried the possibility of a
welfare and tax reform being undertaken during the current
crisis, given that a crisis is a propitious time for reform.
He decided probably not, although the crisis had led recently
to an increased winter fuel payment for pensioners. Quoting
George Monbiot, he pointed out that local currencies, based
on a token system, are beneficial especially during a financial
crisis, because they recharge local economies.
roots of CI in the UK can be traced to Quakers Dennis Milner
and Bertram Pickard at the end of World War I, but their
proposal was rejected by the Liberal Party in 1921. Clifford
H. Douglas, an engineer, suggested Social Credit in the
1920s, distributing part of the national product as a National
Dividend. He received support from John Hargreaves, the
charismatic leader of a group calling themselves the Kindred
of the Kibukift, which Hargreaves then turned into a Social
Credit movement. Social Credit Parties were set up in Australia,
New Zealand and Canada between the wars.
compared the causes of the financial crisis of 1929 with
the present global economic crash, precipitated again by
a failure of the financial systems in the USA and UK. In
1929, it was preceded by a credit bubble, (the dispersal
of which was recommended by CH Douglas), but the motor for
the 1929 crash was industry, rather than housing.
traced the root of the recent crash to a disastrously erroneous
model of governance and public finance, based on a theory
of contracts, information and incentives, and embracing
the whole relationship between citizens and the state. He
pointed to the Labour Party's Third Way, which in 1998 continued
the social contract ideas, based on reciprocity, of the
previous administrations. Increased choice was supposed
to lead to increased incentives. However, markets are those
pricing systems with the least obligation on the part of
recent crash was preceded by a shares-bubble, a credit-bubble
and a house price-bubble, with credit in the central role.
The banks expanded their production of credit to repay loans,
now barely regulated by official controls, and the West
borrowed heavily from the emergent industrialised economies
of Russia, India, Brazil, and particularly from China. It
was an enormous pyramid system. The global consequences
have been severe, even for prudent economies, and especially
for savers. Profits had been privatised, but now losses
are being socialised.
CI proposal offers a way forward, allowing a new organisation
of sustainable work and improved well-being, as well as
equality and fairness between members of our society. Its
emphasis is more on relationship, and less on production,
embodying the feminine ethic of care, and nurturing the
environment. CI promotes well-being, sharing out both unpaid
and paid work, and the proceeds of paid work, thus dispelling
the 'dependency culture'. It promotes solidarity and community,
together with sustainability in both environmental and social
terms. According to Philippe Van Parijs, it has more to
do with identity and actualisation than with greed. A CI
creates new opportunities.
the lively question period, the audience queried whether
a CI system leads to enhanced equality and autonomy within
both the nuclear and the extended family, compared with
societies that rely on family for poverty relief. A CI system
(without work tests) was in direct contradiction to recent
white and green Government papers, which emphasised conditionality
for lone parents and people with disabilities. However,
unemployment has increased, so the move has been self-defeating.
If the government wishes people to spend in order to boost
the economy, it should give them the money and reduce prices.
relaxed delivery and discursive style, backed up by impressively
wide reading, probably posed more questions than it provided
answers, but was none the worse for that. We left trying
to make a picture from the many jigsaw pieces presented
to us in the course of the seminar, but feeling satisfied
by the very stimulating and enjoyable experience.
Louise Haagh (University of York), 'Citizen's Income, Varieties
of Capitalism and Occupational Freedom' held on 10th March
2009, University of Nottingham
Haagh's talk provided a critical account of basic income
discourse, and advocated a clearer focus on what Citizen's
Income (CI) is for, in order to judge its relationship to
paid work and other institutions of universalised welfare.
There is not just one type of capitalism, but each is particular
to its social and cultural environment. She suggested that
many of the claims of CI analysis were too ambitious, since
they did not take account of their social institutions and
political contexts. Her aim was to warn supporters of CI
to beware of the pitfalls that exist. In particular, the
objectives must be examined to see whether they fit with
current political and social institutions.
focused on choice through the 'control of one's own time'
as a source of occupational freedom. She pointed out that,
although many supporters of CI take an underlying free market
economy as given, a CI system would have to be underpinned
by the right to structured work. There will also be a need
for social finance for, and organisation of, schooling,
employment transitions, care and the regulation of work
time; leading to three paradoxes in this regard: control,
politics, and justice.
criticised those supporters of CI who do not separate their
argument for CI from an abstract libertarian defence of
political freedom. They often appear to show a disdain for
socialised work and those who perform it. She distinguished
between the 'crazies' who work very long and hard in a few
highly paid jobs, and the 'lazies' who work less hard for
less pay. This distinction is more marked in deregulated
economies. It is important to diminish the distinctions
of status, and allow all work to have equal priority. Paid
work is a privilege, and those fortunate to be gainfully
employed have obligations to compensate those who do not.
Changes in technology have not led to a reduction in the
need for paid work, but strong institutions are needed to
create jobs. An important advantage of a CI scheme is that
it can help to achieve a more equal balance of paid work,
leisure and care in each person's life.
are three domains where the social function - the organisation
of choice - is central to allow balanced control over one's
own time: education, employment and leisure. Unequal education
and deregulation of paid work lead to a reinforcing cycle
of wage dispersion that provides incentives to seek to purchase
premier education for one's offspring. Or as Louise put
it, 'where inequality begins to emerge in positional goods,
public spending becomes less effective'. Louise presented
a series of tables comparing OECD economies, which revealed
several facts about social choice in respect to overall
control over one's own time. Important observations included
that 1) equal schooling and generous income-support are
positively related; 2) evidence suggests that educational
inequalities are growing in some countries; and 3) the UK
has both the highest level of educational inequalities,
and highest growth in inequality of income of the OECD countries.
Countries have a choice between supporting individuals,
or monitoring and controlling them, and the UK has the highest
level of control of any OECD country.
next pointed out that there is a broad link between average
annual leisure hours and the employment system. In an article
published in 2001, Robert Goodin showed that, in the Dutch
post-productivist economy, leisure hours were associated
with a high share of part-time work. This has been referred
to as 'women's freedom to care', and is similar to the argument
that CI supports carers. This creates a problem, because
it would appear that women have to choose between 'care'
and 'career', because they are at a competitive disadvantage
in the work place, especially in deregulated economies.
conclusion, Louise emphasized the importance of the structure
of social insurance and particularly of a progressive system
of taxation. This is necessary for achieving a more even
structure of opportunities, and thus to a reduction in the
inequality of incomes, all leading to one having more control
over one's time. In UK, we have the paradoxical situation
of experiencing both income insecurity and state control.
As for the question whether a CI is likely to be instituted
in the UK in the near future, one hopes that a clearer path
toward this goal will emerge now that the pitfalls in the
discourse on CI are clearly outlined.
Stuart White (University of Oxford), 'Basic Income versus
Basic Capital: Can We Resolve the Disagreement?' held on
20th March 2009, Queen's University Belfast
White delivered a thought-provoking presentation on a topic
on which he is one of the world's leading experts, the similarities
and distinctions between basic income (BI) policies and
basic capital (BC) grants. The debate of the past decade
amongst advocates of the 'Citizen Endowment Thesis' (the
idea that all citizens are entitled, as of right, to a certain
endowment of resources, without any means test or labour
contribution) has been concentrating on the question whether
we should hand out such an endowment in the form of a periodic
(non-mortgageable) basic income or rather as a one-off lump-sum
grant, paid to the individual on reaching maturity.
some advocates (and perhaps even opponents) may think this
is merely a practical matter, Stuart believes there are
genuine ethical considerations to take into account as well.
For instance, as Stuart rightly pointed out, important comparability
problems emerge when attempting to evaluate the pros and
cons of the standard BI and BC proposals. Specifically,
the present discounted value of BI and BC will be different,
and it is not clear what amounts to a fair comparison in
that regard. Further, differences in the financing of either
scheme as well as different options in terms of substituting
for existing expenditures make the comparability of BI and
BC almost intractable. Perhaps a normative account of the
relevant differences between these two schemes might offer
some answers, and Stuart's talk proceeded to outline several
lines of argument to that effect by introducing a key distinction
between equality-based and freedom-based arguments for BI
arguments typically focus on 'inherited external assets'
which are to be divided equally, typically by taxing their
full market value and distributing this in the form of a
uniform grant. Stuart pointed out that there are a number
of complications that need to be resolved (most importantly
which resources qualify to be shared equally without any
further conditions), but the main question is whether the
equality argument favours BI over BC, or the converse. One
reason to think equality favours BC is to consider the objection
that a BI would distribute resources unequally in cases
where some individuals live longer than others: if I live
25 years longer than you, the BI that I receive during those
25 'extra' years will obviously be substantially larger
than the BI you received during your lifetime. By contrast,
equality might favour BI because it better tracks the changing
market value of external resources: whereas a one-off grant
will have its value fixed, a regular BI can be easily adjusted
to accommodate increases (or decreases) in value of the
resources that provide the foundation for the grant.
far it would seem, on equality grounds, both BI and BC score
equally. But Stuart thinks quite a different equality argument
can be found when thinking in terms of social equality,
which is the equality in social relations rather than pure
distributions of resources. And here, Stuart thinks BI seems
more effective in terms of promoting social equality by
constraining the dependencies that arise through labour
market competition and so on. A BC might offer better immediate
opportunities, but once the grant has 'expired' - whether
because of our own actions or through sheer bad luck - we
remain vulnerable to the very social forces that a regular
BI is able to counter. This of course brings us very close
to the second line of argument, which suggests a BI or BC
must in the first instance protect individuals' primary
interest in freedom. Here again, Stuart again finds that
some variants favour BI while others favour BC.
one of the most controversial insights of Stuart's talk
was the extent to which the freedom-based arguments must
engage with paternalistic considerations. Although CI advocates
are notoriously averse to even a whiff of paternalism, Stuart
convincingly demonstrated that some of the arguments in
favour of BI over BC in fact depend on a solid dose of paternalism.
Even more surprising there might be a paternalistic argument
favouring BC, in that we could argue it would be most sensible
for individuals to avoid choosing either BI or BC and instead
opt for a combined scheme. This then leads up to Stuart's
positive case for hybridity, in which BI plays a crucial
role in preventing vulnerability which BC takes the primary
role in ensuring (equal) opportunity. For Stuart, forcing
the matter as an either/or is simply to ignore the benefits
of instituting both simultaneously; benefits that are supported
both on grounds of equality and freedom.
with the other seminars, Stuarts' provocative talk lead
to numerous questions and a very engaging debate. Participants
queried some of the assumptions or argument internal to
either the equality- or freedom-based perspectives, while
others wondered which of these argumentative strategies
is most promising in terms of settling the debate. Others
again suggested that, while the internal debate between
BI and BC is interesting, there remains much work to be
done convincing UK citizens (and politicians) that the starting
point of a set of external resources that ought to be shared
equally, without means test or labour contribution, is valid
in the first place. These concerns notwithstanding, there
was unanimous agreement that Stuart's talk gave us much
to think about, and no doubt will require following-up at
the 5th June the Financial Times published an article
by Martin Sandbu and Nicholas Shaxson entitled 'Give the
people their resource wealth'. The authors list a variety
of policies which governments have established in relation
to natural resource revenues: savings funds, the funding
of diversification, and transparency, and suggest that the
most effective policy is simply to distribute the revenues
to the population: 'The solution is simple but radical:
distribute extractive revenues directly and equally to all
citizens. Instead of fighting each other for oil rents,
political elites would have to bargain with the people for
tax revenues. If the government did not tax everything back,
direct distribution would dramatically transfer wealth to
the poor.' http://www.ft.com/cms/s/0/1e842a9c-513d-11de-84c3-00144feabdc0.html
Pensions Policy Institute has made a submission to
the Work and Pensions Select Committee inquiry into tackling
pensioner poverty in Great Britain. 'The reforms to state
pensions introduced in the Pensions Act 2007 will reduce
inequalities in state pension incomes over time.
But there are still inequalities in state pension incomes
for those retiring before 2010, and for generations reaching
state pension age before the reforms are fully fed through.
Some other inequalities will remain, as a large part of
the pension system is still linked to the working histories
of individuals due to the contributory nature of state pensions.
Individuals with low earnings and/or career breaks not covered
by the system of credits will still receive lower state
pension income.' (http://www.pensionspolicyinstitute.org.uk/news.asp?p=187&s=5&a=0)
Child Poverty Action Group has published Ending
Child Poverty: a manifesto for success: 'There are still
nearly 4 million children living in poverty in Britain today.
The Government has promised to eradicate child poverty by
2020 and we cannot afford to fail. In today's difficult
economic climate, our manifesto calls for immediate action
to help employers protect jobs. The income safety net must
be mended; and greater use made of universal benefits in
tandem with progressive taxation, rather than over-reliance
on means testing and accumulation of excessive wealth at
As we look ahead to the years between
now and 2020, we know that our country will be judged not
just on whether we can rebuild an ailing economy, but on
whether we build it as a fair economy: an economy that makes
child poverty a thing of the past
support, such as Child Benefit, is typically better delivered
and does not suffer the stigma often attached to means-tested
support. CPAG believes it is time to raise family incomes
of the poorest and, within this, to increase the proportion
of non-means-tested financial support. The UK social security
system is complex, with the result that quality of administration
is often low. Both claimant and official error rates are
high, meaning that those entitled find it difficult to realise
their rights. The use of a test of means as a mechanism
to establish entitlement generates inherent complexity.
Evidence to the Work and Pensions Select Committee inquiry
suggested 'a direct correlation between the amount of means-testing
and the complexity in the system'. Child Benefit is popular
and functions effectively because it is simple to understand
and, because it is usually well administered and has a very
high take-up rate, it actually reaches more children living
in poverty than the more targeted Child Tax Credit. As Child
Benefit is not means-tested, it is not withdrawn as parents
earn more and so it supports moves into employment. Means-tested
benefits worsen the poverty trap because they are withdrawn
as earnings rise. In recent years, the cash value of child
benefit has been raised in a variety of ways. First, by
an increase in the amount paid for the first child in 1999,
then by a smaller increase in January 2009 by extending
it back into pregnancy (through the health in pregnancy
grant), disregarding Child Benefit in the assessment of
Council Tax Benefit and housing benefit, and by extending
entitlement for some older children near school completion
age (or in training). Each of these is welcome, but more
can be done with this popular benefit to galvanise public
support for investing in children' (quoted from the introduction
and p.27, http://www.cpag.org.uk/manifesto).
the 4th February the Luxembourgish newspaper Tageblatt
published an article by Ady Faber. The author summarises
his article: 'Huge injections of public money into the financial
system in an effort to end the present turmoil will leave
massive public debts that will impede future leftist politics.
The increase of the jobless rate as a consequence of the
crisis will raise another challenge. Therefore leftist parties
and the progressive wings of other parties would be best
advised to reconsider their goals. Directly addressing the
social needs of the population on a European scale would
offer the best prospects. In most European countries charity-type
support for jobless and citizens in need exist. These regimes
can be easily transformed into Basic Incomes. We recommend
a novel European policy which should be eagerly welcomed
by the people'.
Geneva Association (The International Association for
the Study of Insurance Economics) in its newsletter for
March 2009 reiterates the reasons for recommending that
there should be 'four pillars' for maintaining incomes during
retirement: 'The idea is to find the right equilibrium between
1. public pension, 2. occupational and 3. private funded
pensions, and 4. a flexible extension of work life
A system based exclusively on the labour market and population
growth [i.e., pillars 1 and 4] is very sensitive to the
ageing of the population. A system relying exclusively on
the financial market [i.e., pillars 2 and 3] is sensitive
to any change in the economic conjuncture. The case of the
U.S. is a direct application of retirees relying nearly
exclusively on the return of their pension funds. A premise
in risk management is to not put all one's eggs in the same
Department for Work and Pensions report (Research
Report No 569) on The impact of financial incentives
in welfare systems on family structure, by Bruce Stafford
and Simon Roberts, concludes: 'Whilst there are studies
finding significant impacts, these tend to be small and
are countered by studies finding no relationship or the
opposite effect. To the extent that some studies provide
evidence of a welfare effect on family structure, its magnitude
is often smaller than classical economic theory might predict.
On balance the reviewed literature shows that there is no
consistent and robust evidence to support claims that the
welfare system has a significant impact upon family structure.'
at the University of Toronto has studied changes
in Israel's Children's Insurance Plan. This was a universal
benefit until 1984, then income-tested, and then universal
again from 1993. The research report identifies the reasons
for the reintroduction of universality as low take-up of
the income tested benefit, the resulting increased poverty
amongst low income families, and the possibilities open
to political actors in this context (Sharon Asiskotitch,
'Digging their Own Graves: Unexpected Consequences of Institutional
Design and Welfare State Changes', Social Policy and
Administration, vol.43, no.3, June 2009, pp.226-244).
Income Standards: A Challence for Citizen's Income
objective in this paper is to design a Citizen's Income
(CI) scheme where the primary purpose is to prevent poverty,
based on the benchmarks provided by the Minimum Income Standards.
It is expected to result in a large measure of redistribution.
also provides a novel 'Quick Calculator Table' for estimating
a ball-park figure for the personal income tax rate that
would be required to finance a given CI scheme, if it were
financed from a hypothecated personal income tax system,
in which all personal incomes from all sources were taxed
at the same tax rate, and there were no personal allowances,
tax reliefs, exemptions, or other tax expenditures.
Family Budget Unit and Minimum Income Standards
Family Budget Unit at York University was set up in 1987.
One of its founders, trustee, director, and inspiration,
was our own late Mimi Parker, (one of the founders in 1984
of the Basic Income Research Group, inspiration, and editor
of the BIRG Bulletin, later re-titled the Citizen's
Income Bulletin, until 1998). The FBU calculated budgets
for different household groups according to Modest But Adequate
(MBA), and Low Cost but Acceptable (LCA), standards, (www.york.ac.uk/res/fbu).
Researchers and others could compare their ideas or experience
with these benchmarks.
2006, the FBU and the Centre for Research in Social Policy
at Loughborough University combined resources to produce
a set of Minimum Income Standards (MIS), funded by the Joseph
Rowntree Foundation, (www.minimumincomestandard.org).
Its final report was launched in July 2008. It is based
on 39 focus groups, involving more than 200 people, in combination
with input from experts in heating and nutrition. Thus,
it combined the two approaches previously used separately
by the two institutions.
addition, the organisation publishes the budget details
for MISs, comparable to the FBU's LCA standard, in spreadsheet
for 13 household types. The challenge here is to design
a CI scheme that prevents poverty as defined by the benchmarks
of the MIS.
a CI scheme:
The tax and benefit unit is the individual. This leads to
Eligibility is based on citizenship.
The CI is administered as a regular payment to the individual,
rather than as a Negative Income Tax (NIT), where an income
is paid net of any lesser tax liability, or as a Tax Credit
(TC), where the CI acts as a credit deducted from a greater
In CI schemes, selectivity or contingency is minimal, and
definitely not based on personal circumstances that could
vary frequently. Thus, the level of CI may vary according
to age, but definitely not according to gender, sexual preferences,
race, religion, legal status of partners, or other domestic
living arrangements, nor to any past or present work performance
nor any willingness-to-work tests. It is assumed that costs
that arise on account of a disability (for care, mobility,
special diets, equipment, heating or laundry, etc) will
be paid in addition to any CI benefit.
Full Citizen's Income, FCI, is one that is expected to cover
the minimum expenditure necessary for an individual to meet
his/her needs, including that of participating in society.
An example of a Full Citizen's Income to meet the Minimum
Income Standards of all is given in the Summary Table (Table
3) below, leading to a flat rate tax of 0.57, but is not
discussed in detail here.
Partial Citizen's Income, PCI, would not be sufficient for
an individual to cover the minimum expenditure necessary
to meet his/her needs, on the assumption that the shortfall
can be made up from other sources, particularly earnings.
(A PCI may go some way to satisfy those who would prefer
a participation income scheme, because the PCI provides
the incentive to top up one's CI from earnings. It could
produce the same effect as a participation income, but without
the control and coercion that seems to be an integral part
of participation income schemes.) Even on a flat tax rate
of between 0.40 and 0.50, many a recipient would face a
lower income tax rate than the current high effective marginal
tax rates in the UK caused by the combined income tax rate
and benefit withdrawal or taperrate.
are some adults, whom, for reasons of old age or disability,
a humane society should not require to have to top up a
Partial CI with earnings, (although they would be at liberty
to earn extra, if they wished). Thus people of age 65 and
over, and people with disabilities would receive a Full
(young) children need (constant) care, and the question
arises of how to design a CI scheme that would recognise
both the needs of children and of the adults who are responsible
for their care. Four different approaches are considered
same PCI could be given to adults and children alike,
so that it meets the MIS benchmarks.
aged 0-15 inclusive would receive a Child CI (CCI), and
a Parent-with-Care (PwC), usually the mother, would not
be expected to have to top up her CI to meet her MIS,
(although she would be entitled to earn extra if she wished).
She would receive a FCI, in recognition of her time, physical
and emotional efforts, and constraints on her life due
to child-rearing responsibilities. A Lone Parent (LP)
and the PwC in a two-adult household would receive the
same amount, and it would have to be sufficient to meet
the greater MIS of the LP. This would remove the odious
and intrusive cohabitation rule, and a PwC would not have
to inform the authorities every time her status as a LP
or cohabitée changed. This arrangement would infringe
the idea of a 'pure CI scheme', because this FCI is contingent
on an activity status, or unpaid work status. However,
it is also a matter of justice, that a PwC should receive
more than a working-age adult without care responsibilities.
child would have a care package associated with him/her,
dependent on age (ie date of birth).
could adopt the Scandinavian model, where the majority
of children attend state-funded nurseries, staffed by
highly trained nursery nurses, who are more knowledgeable
in child development than the average parent, and this
leaves both parents free to join the labour market.
of the four options is considered here.
fourth category of vulnerable adults is that of carers.
This is contentious between organisations working on behalf
of people with disabilities, and organisations for carers.
Even if a package covering constant care is organised for,
and administered by, the person with the disabilities, s/he
might decide not to pay a member of his/her household to
care for him/her, but the carer of last resort is likely
to be a member of the household, who would de facto
have to take on the responsibilities when paid carers are
sick or on holiday. It is assumed here that a member of
the household would be designated as carer, and receive
a Full CI in return for accepting 'carer-of-last-resort'
Income should be related to the prosperity of the country
tables 2 and 3 below, each level of CI is expressed as a
proportion of GDP per capita, (The Blue Book 2008,
Tables 1.2 and 1.5). If CI levels are expressed in this
way for all countries, it facilitates a comparison of the
generosity of each country's proposed or actual scheme,
although it ignores access to public services such as education
and health. However, in order to translate this into a personal
income tax rate, it is necessary to relate GDP to 'The Total
Resources of Households and Non-Profit Institutions Serving
Households, NPISH', (The Blue Book 2008, Table 6.1.3).
This is the potential TAX-BASE, when there are no personal
tax allowances, tax reliefs, exemptions or other tax expenditures.
(This reclaims the tax base, and allows a lower income tax
rate to be levied than otherwise.) TAX-BASE divided by the
population gives the average personal income for the UK,
which is referred to here as Y-BAR, and this is used to
calculate the personal income tax rate necessary to finance
the given CI scheme, (see Miller 2006, for the argument
underlying this approach). It is assumed that the same proportions
of GDP per capita for FCI, PCI and CCI would be applied
each year of a government's administration, using the most
recently available figures for GDP, population, TAXBASE
and Y-BAR. Adopting the same proportions each year should
have the added advantage of providing a stabilising effect
on the UK's economic cycles. The Blue Book 2008 gives
GDP and GDP per capita figures for 2007, on which CIs for
2009-10 could be based.
is assumed here that the CI scheme is funded by a hypothecated
personal income taxation system, (where employees' National
Insurance contributions are subsumed into the income tax
system), partly because benefits and personal taxation are
reverse sides of the same coin. A hypothecated system also
helps one to consider what is feasible in terms of the cost,
as it measures the direct impact on the population, and
again facilitates international comparisons. Of course,
other methods of financing a CI scheme can also be explored.
Most of government expenditure (as opposed to transfers)
has been of the same order of magnitude as the tax revenue
from other types of taxes in the UK (see Miller, 2006).
flat tax (or proportional tax) is assumed here, mainly for
convenience, because it is easier to calculate the tax revenue
yielded than that from a progressive scheme, where one would
need far more information about the distribution of the
gross income. It would not preclude higher rates of income
tax being imposed at higher income levels, when the time
came for implementation. Obviously a progressive system
would be more just, and in Scandinavian countries, tax rates
of around 0.65 are not unknown. But, even a flat tax coupled
with a CI scheme can be a very effective method of reducing
income inequality. A flat-rate tax is often proposed for
political expediency, because it is thought that it might
be easier to sell to those who would otherwise be hit by
a progressive scheme. A standard flat rate of income tax
will be calculated, which would be levied on personal income
from all sources, which will be that required to finance
the CI scheme.
Citizen's Income scheme taking account of Minimum Income
1 gives the MIS including rent, but excluding childcare
expenditure, for 13 different household configurations in
column 1. The proportion of Y-BAR that this represents is
given in column 2.
a CI scheme must be created where the vulnerable adults
receive a FCI, while an able-bodied, working-age (16-64
inclusive) adult without the responsibility for the day-to-day
care of adults or dependent children receives a PCI, on
the assumption that s/he is likely to be able to earn enough
extra income, after paying the personal income tax, to reach
the scheme devised here,
is determined by the MIS of a female aged 65 & over.
CCI = (MIS of the Lone Parent with 3 children - FBI) divided
PCI = MIS of the 2-adult household with three children -
FBI - 3 x CCI.
latter two cases relate to the households where the expenditure
is most constraining.
||proportion of Y-BAR
CCI equals PCI in this scheme.
results for each household group are given in columns 3,
4 and 5 of Table 1. While making sure that the most vulnerable
are protected from poverty, others may receive more than
the minimum necessary for their MIS. This is especially
obvious in the cases of the pensioner couple, and the 2-adult
household with 4 children, both of which are shown in italics.
1. MINIMUM INCOME STANDARDS AND CITIZEN'S INCOME LEVELS
FOR DIFFERENT HOUSEHOLD TYPES
||MIS* inc rent £ pw
||prop of Y-BAR
||CI for household
||CI as prop of Y-BAR
||CI for hshld £ pw
||Current State Bens, 2009-10 **
|Fem, aged 65 & over
|Male, aged 65 & over
|Couple, aged 65 +
||2 x FCI
|Fem, aged 16-64
64.30 + HB
|Male, aged 16-64
64.30 + HB
||2 x PCI
|LP + toddler
||FCI + CCI
|LP + pre + prim sch
||FCI + 2 x CCI
|LP + pre+ 1 + 2 sch
||FCI + 3 x CCI
|2 adults + toddler
|2 adults + pre + prim
|2 ads + pre + 1 + sec
|2 + todd + pre + 1 + 2
shows those households purely on PBI, which does not meet
shows households that gain disproportionately from the CI
Source: 'Benefit and Pension Rates', April 2009, BRA5DWP,
These give Pensioner Credit levels, income-based Job Seeker's
Allowance for those aged 25 and over, adding £56.11
for each dependent child, and a family or Lone Parent premium
of £17.30 pw, where relevant. It is assumed that all
Means Tested Benefits lead to HB entitlement.
2. PERSONAL INCOME TAX RATE QUICK CALCULATOR TABLE
OF THE INFORMATION REQUIRED TO ESTIMATE THE PERSONAL INCOME
TAX RATE WHICH COULD FINANCE A CITIZEN'S INCOME SCHEME,
SHOWING THE EXTRA COSTS OF FULL CITIZEN'S INCOMES FOR SOME.
||Col.8 = col.3 x col.6
||Population, UK*, 2007
||Proport-ion of populat-ion
||Y-BAR** 2007 £ pa
||YBAR** 2007 £ pw
||Proportion of average gross income, YBAR
||Proportion of GDP *** per capita
||Cost of CI in terms of income tax rate
|| CI pa
|| CI pw
Partial CI £4,600.56
Partial CI £88.23
|People aged 65 +
Full CI £5,308.50
Full CI £101.81
|people, 16–64, with disabilities
|Carers, aged 16-64
|Lone parents & other PwC aged 16-64
|Children, aged 0-15
Child CI -£0.00
Child CI -£0.00
|| Disability benefits,
|| Add margin for safety-net and admin.
||TOTAL INCOME TAX RATE REQUIRED TO FINANCE
Most of the data have been updated to 2007 (the most recently
available figures) from the following sources:
Mid-year population estimates for 2007 were obtained from:
'Total Resources of Households and Non-Profit Institutions
Serving Households', 2007, (QWMF), = £1 078 911 m
(Blue Book 2008, Table 6.1.3).
average gross income (Y-BAR) = £17 695 pa; multiplying
by 7/365 = £339.35 pw,
(output method) at market prices, 2007, (YBHA) = £1
401 042 m (Blue Book 2008, Table 1.2)
per capita, 2007, (IHXT) = £22 977 pa; multiplying
by 7/365 = £440.65 pw (Table 1.5)
benefits, 2007, (EKY6) = £10,486 m, would add about
0.01 to the tax rate (Blue Book 2008, Table 5.2.4S).
cost of the above CI scheme has been estimated using the
novel 'Miller Personal Income Tax Rate Quick Calculator
Table', in Table 2. This table summarises in a compact way
the information necessary to calculate a ball-park figure
for the income tax rate that would be required to finance
a simple Citizen's Income scheme, such as the example above,
if it were to be financed solely from a flat-rate personal
income tax (assuming that National Insurance contributions
will be subsumed into the income tax system), on taxable
income from all sources, with no personal allowances, tax
reliefs or exemptions, except the CI. Information relating
to 2007, available in 2008, could be used to determine CI
levels for the tax year 2009-10. The quick calculator table
works well as a spreadsheet, for working out the costs of
changes to a scheme.
Blue Book is the United Kingdom National Accounts,
published annually by the Office of National Statistics.
The four-letter reference codes are used by the ONS.
system above would require a personal income tax rate of
0.42, which is not out of the bounds of feasibility. In
the tax year 2009-10 under the current personal income tax
system, a person with an income greater than £43,875
(with a personal allowance of £6,475 + tax threshold
for higher income tax rate of 0.40 at income level of £37,400)
will already pay a combined tax rate of 0.40 income tax
and 0.01 National Insurance contributions. At a gross income
of £43.875, his/her net income will be £32,198:
+ (1.00 - 0.20 inc tax - 0.11 NI) x £37,400 - 0.11
NI x (£6,475 - £5,720)
= £6,475 + £25,806 - £83
is an anomaly in that the employee's NI contribution rate
of 0.11 starts at £110 pw, or £5,720 pa, which
is less than the personal allowance of £6,475 at which
the standard rate of income tax applies).
working-age adults without day-to-day caring responsibilities
2009-10, for someone receiving a PCI together with a gross
income of £43,875, his/her net income would be £30,048,
(ie. £4,600.56 + (1 - 0.42) x £43,875). For
most of the range of gross income up to about £25,000,
an able-bodied, working-age adult would be better off with
the PCI than under the current tax system. For most of the
range of gross income up to about £14,000, s/he would
face a lower effective marginal tax rate of 0.42, instead
of the high combined income tax rate and benefit withdrawal
rates, which, for Working Tax Credit, for instance, is usually
at least 0.70, and thus s/he would have a greater incentive
to earn more and to increase his/her income. Most of the
0.4325 of the population receiving FCIs will almost certainly
be better off than under the current tax system.
of those receiving only a PCI, who live in areas where there
are few opportunities even for part-time work, would face
a problem. Maybe this could be addressed in the short-run,
by offering a Housing Benefit scheme, to top up their incomes.
It would be part of the safety net necessary for those who
do not qualify for a CI, or who are deemed to be in poverty
in spite of it. If the CI scheme has the effect of redistributing
to, and thus regenerating, run down areas in the medium
term, as hoped, work opportunities would be increased. The
shortfall in the MIS for those living alone with PCIs is
(£210.65 - £88.23) pw = £122.42 pw. Even
where there is work, unskilled people on a minimum wage
rate of about £6 per hour, and a tax rate of 0.42,
would take 35 hours per week to earn this. The granting
of a Housing Benefit (of £52.30 as stated in the MIS
schedule) would reduce it to 20 hours per week. Sharing
housing would also help to reduce the short fall. A student
living on his/her own would be in the same situation, but
many are likely to be living in their parental homes, or
sharing with other students. The maximum student loan for
maintenance for the 2009-10 academic year, for a student
from England or Wales living away from home (except for
those in London), will be £4,950. This is 0.28 of
Y-BAR, compared with 0.26 from the PCI.
alternative rate for the PCI might be considered, if it
were thought that the PCI should not be less than that which
an unemployed, single, working-age adult receives already
in the form of state benefits, ie Job Seeker's Allowance
in 2009-10 of £64.30 pw plus Housing Benefit, assumed
here to be £52.30 pw. (PCI = £116.60 pw or £6,079.86
pa). This represents 0.3436 of Y-BAR. If the PCI were increased
to 0.345, (£117.00 pw or £6,100.71 pa), it would
increase the required income tax rate by 0.032, (see the
Table 3 below), that is, the relevant income tax rate would
increase to approximately 0.452. Note that two-adult households
with children would gain disproportionately from such a
second option would be to allow an earnings-disregard of
£122.17 pw (£6,370 pa, or 0.36 of Y-BAR) for
those receiving a PCI (or even a CCI), such that each pays
zero tax on their gross income (excluding the CI), until
the net income (including the CI) reaches the MIS rate of
0.62 Y-BAR, ie. £210.40 pw (£10,971 pa). (A
PCI with an earnings disregard is beginning to look even
more like a participation income than does a PCI without
one, again without the control or coercion). A ballpark
figure for the maximum loss of tax revenue from adult earnings
only, (by assuming that all adults would earn at least £6,370),
can be gained from (0.3788 x 0.36 x 0.42) = 0.05727. It
can be shown by using a more accurate method that the earnings
disregard could add an extra 0.06 to the flat-rate tax,
(for the method, see Miller, 2008). An earnings disregard
has other disadvantages in addition to the loss of revenue.
These include the complications of administering the tax
system, (such as, is it a weekly disregard or an annual
one?), and the fact that employers operating PAYE schemes
would be able to distinguish between a vulnerable adult
who pays tax and the others who do not. But these are typical
of any progressive scheme.
people with disabilities
assuming that the MIS estimates for a working-age individual
with disabilities living alone would be the same as those
for an able-bodied, working-age adult at £210.65 pw,
(0.62 of Y-BAR), the FCI that the former would receive,
at 0.56 of Y-BAR, is less than his/her MIS. Even sharing
with an able-bodied, working-age adult who is not a designated
carer and receives 0.26 of Y-BAR, would not be sufficient
together to reach the MIS (0.91 of Y-BAR) for a two-adult
household. However, many working-age adults with disabilities,
will live in a household with a designated carer, and each
will receive 0.56 of Y-BAR, which together is greater than
the MIS for a two-adult household. So, the question is that
of 'How to address the MIS of the individual with disabilities
living on his/her own?' One answer would be to increase
the FCI for all those with disabilities to 0.62, which would
add 0.0054 to the standard income tax rate, (ie. 0.0902
x 0.06). Another solution would be to expect it to be covered
in the costs-of-disability package that would have to be
worked out for each individual. This would cost less because
it would only affect those living on their own, without
a designated carer.
for families with children
us return to the alternative ways of supporting families
all children and all adults under the age of 65 (excluding
those with disabilities, and carers of last resort) received
the same PCI, it would have to be of the order of 0.40
of Y-BAR in order to meet MIS for families with children,
and will cost (0.679 x 0.40) + (0.321 x 0.56) = 0.2716
+ 0.1798 = 0.4514, before adding on the disability payments,
safety net and administrative costs, yielding an income
tax rate of about 0.48. So, this approach is more expensive
than the one estimated above.
scheme estimated in Table 2 above is an example of the
second option, where PwCs receive FCIs.
so far, I have not addressed the child-care costs. The
child-care costs cited by MIS were £135.05 pw, (£7042
pa, or 0.3980 of Y-BAR) for babies, toddlers and pre-school
children needing constant care, while for primary school
children it is £51.93 pw, (£2707.78 pa, or
0.1530 of Y-BAR). There are 3,592,600 babies, toddlers
and pre-school children aged 0 - 4 inclusive, representing
0.0589 of the total UK population. There are 4,157,600
children, aged 5 - 10, representing 0.0682 of the total
population. It is feasible to imagine a system where each
child has associated with it a cost-of-child-care payment,
determined purely by his/her age (i.e., date of birth).
If these were financed out of the income tax system, the
cost of child-care would add another 0.034 to the standard
tax rate, bringing it up to 0.454.
x 0.3980) + (0.0682 x 0.1530) = 0.023442 + 0.010435
perhaps it could be financed out of another type of
the Scandinavian system were adopted, the majority of
children would be sent to state-funded nursery schools,
where they are nurtured and taught by highly trained nursery
staff, who understand far more about child development
than most parents. This releases both parents to be part
of the labour market. This is not an approach that is
likely to be adopted overnight, but it would have the
effect of unpaid care being shifted into the paid care
system and being included in GDP, and therefore would
become more highly valued in our society. This would definitely
have to be financed as part of government expenditure
out of other types of taxation, and not the hypothecated
personal income tax system.
cost of housing
of the problems facing any income maintenance scheme is
that of the high housing costs in many parts of the UK.
A CI scheme is not a panacea for all ills, and should not
be expected to cure the problems in the housing market,
which are due to different causes. For instance, these problems
could be addressed directly by regulating the housing market
more tightly, by controlling the amount of mortgages lent
as a proportion of valuation, and limiting mortgages to
only two-and-a-half (or three) times a borrower's income.
Further, if Capital Gains Tax were payable when a home-owner
downsized the value of his/her main home, and other similar
measures were adopted, then perhaps, housing bubbles could
be averted, and houses could become merely homes again,
rather than speculative investments. These measures could
protect new low-cost housing from being bought by wealthy
people as investments. An advantage of the CI scheme is
that it provides an incentive to share accommodation and
reduce the pressure on housing, whereas the present system
has the reverse affect, pushing people apart.
3. SUMMARY OF TAX RATES: STANDARD RATE AND OPTIONAL EXTRAS
||population UK, 2007
||propn of total
|| CI £ pa
|| CI £ pw
||prop of Y-BAR
||proportion of GDP pc
||income tax rate
||FULL CITIZEN’S INCOME SCHEME
|Aged 65 +
||costs of disabilities, safety-net, and
||PARTIAL CITIZEN’S INCOME SCHEME
|0 - 15
||costs of disabilities, safety-net and
|people aged 16-64 OR earnings disregard
add to PCI 1,500.15
+0.032198 OR +0.06
|16-64, with disabilities
add to FCI 1,061.63
|Child-care 0–4 years Child-care 5–10 years
+0.023442 +0.010435 +0.033877
CI scheme put forward meets the MIS of most of the population.
There are concerns about the assumption that able-bodied,
working-age adults without caring responsibilities will
always be able to earn enough to top up their Partial Basic
Incomes to meet their Minimum Income Standard. This is also
true for working-age adults with disabilities. Suggestions
were made for ways to address this. The standard income
tax rate required to finance the scheme in Table 2 is 0.42,
which is feasible. Most individuals with a gross income
of less than £25,000 (in addition to the CI) are likely
to be better off, both in terms of net income, incentives
to work, and the financial autonomy granted by the CI system.
and sources of data
Budget Unit, www.york.ac,uk/res/fbu
Anne G. 'Assumptions and calculations for a simple Citizen's
Income Scheme', Citizen's Income Newsletter, 2006,
issue 1, pp. 1 - 12.
Anne G. 'Designing and Costing Simple Basic Income Schemes',
paper presented to the Basic Income Earth Network Congress,
Dublin, 21 June 2008. www.basicincomeireland.com
Income Standards, www.minimumincomestandard.org/ready_reckoner.htm,
Centre for Research in Social Policy, Loughborough University.
NewBenefitRates.pdf. dated 11 Dec 2008, from www.dwp.gov.uk/whatsnew
'Benefits and Pension Rates, April 2009', BRA5DWP, www.dwp.gov.uk
of National Statistics, United Kingdom National Accounts,
The Blue Book 2008
Bill Jordan, Welfare and well-being: Social value
in public policy,
Policy Press, 2008, iv + 283 pp, hbk, 1 84742 081 7, £65,
pbk, 1 84742 080 0, £22.50
is a polemic, and a most effective one. The first part of
its thesis (explored in part I) is that the economic model
of rational individuals choosing how to satisfy their private
desires now controls what we mean by 'welfare' and the means
whereby we provide it, but that this is no way to provide
for well-being. Sociological research has shown that as
income rises, self-assessed well-being rises and then plateaus.
Maximising economic rewards can be a stressful business,
and we don't always choose options in the marketplace which
actually increase well-being - so, as Jordan suggests, 'the
paradox of the present situation, in the affluent Anglophone
countries, is that the economic model is both dominant (as
a basis for public policy, and within the social sciences)
and fragile in the tenability of its fundamental assumptions'
second element of the thesis (explored in part II) is that
there is another way: a way based on 'social value'. Our
well-being in fact depends on the quality of relationships
and on the culture of the collective in which we live -
and this well-being is itself social: it is the well-being
of populations. The problem is that the culture of our society
is significantly informed by the economic model, so we become
'cultural dopes', unable to escape from this model.
employs the term 'welfare' for the individual's utility
maximisation, and thus, in terms of the economic model,
'well-being' is a quality of societies. The former is easier
both to conceptualise and to operationalise. Contracts between
individuals or between individuals and institutions have
consequences which we can fairly easily analyse. A culture
of well-being is rather more difficult both to measure and
to foster. Thus part III of the book asks whether the economic
model of welfare might generate a culture which enhances
social value, thus reconciling welfare and well-being. Jordan
discussions a Citizen's Income (here called a Basic Income)
and suggests that, whilst a Citizen's Income in itself would
not necessarily create a socially-understood well-being,
it could complement the other complex social processes which
might do so. 'The conflicts between the priorities of maximising
the basic income and sustaining the practices and cultures
conducive for well-being would be the new stuff of democratic
Citizen's Income is, after all, rooted in liberal individualism,
so it is no surprise that in itself it cannot create social
well-being. What we now need from Bill Jordan is a detailed
examination of the institutional changes which might create
social well-being. He is particularly interested in the
ways in which we care for children and for the elderly,
so a study of how a Citizen's Income might cohere with a
package of policy changes aimed at improving the social
well-being of children and elderly people would be most
informative. If he finds that the necessary changes would
be promoted by a Citizen's Income then, because a Citizen's
Income is rooted in liberal individualism and would enhance
individual choice, and because it is also a feasible
reform (Jordan doesn't discuss feasibility in this book),
then a Citizen's Income would fit his criteria for reform
which would employ the economic model in order to enhance
the end it comes down to what we do with our lives. 'Many
people remain loyal to non-welfarist communal activities
such as crafts, sports, musical styles or outdoor pursuits,
but they are induced to see these as 'lifestyle choices'
rather than essential aspects of well-being' (p.250). Would
a Citizen's Income increase our involvement in such culture-building?
We need to know.
Reintsma, The Political Economy of Welfare Reform in
the United States,
Edward Elgar, 2007, xi + 220 pp, hbk, 1 84376 133 5, £59.95
author views the legislative process which led to the enactment
of the Personal Responsibility and Work Opportunities Reconciliation
Act (PRWORA) in 1996 from two perspectives: 1. the public
interest model of government (which assumes that legislators
are motivated by what the public needs), and 2. the public
choice model (which views legislators as actors with their
own rational objectives rather than as servants of a government
seeking agreed allocative or distributive ends). A detailed
exploration of the legislative process leads to the conclusion
that a public choice model best explains the outcome at
book starts with a discussion of the welfare provision which
PRWORA replaced and, for comparative purposes, of the welfare
states of Sweden, the UK and Germany. Early on, the impact
of the European Union on European social policy is also
discussed. Both the 'public interest' and 'public choice'
models are described, a public choice model of United States
governance is constructed, and the history of the United
States welfare state (and of its roots in the British system)
is outlined. Then follows a detailed history of PRWORA,
an institutional analysis (a study of the interest groups
which influenced the legislation), and an analysis of welfare
caseloads - and in this context Reintsma concludes that
'the statistical analysis
. provides substantial support
for the public choice argument that the influence of interest
groups on economic policies such as welfare legislation
is both substantial and effective' (p.192).
raises a question for anyone interested in tax and benefits
reform in the UK. It's easy to see who might benefit from
a system which employs the private sector to provide supervised
activity related to a government policy which sees such
activity as a method for moving people from unemployment
to employment. It is also easy to see that individuals'
work incentives would benefit from a Citizen's Income and
possible to see which interest groups might lose if a Citizen's
Income were to replace Job Seeker's Allowance and its related
programmes. The message of this book is that it isn't the
desirability or the feasibility of a policy that counts.
What matters is which interest groups might gain from the
proposed social policy change.
Van Dongen, Towards a Democratic Division of Labour in
Policy Press, 2008, ix + 288 pp, pbk, 1 84742 269 9, £29.99,
hbk, 1 84742 294 1, £70
book is timely. Recent discussion of whether or not a proposal
for extending provision for flexible working is sensible
during an economic downturn is just one symptom of the fluid
nature of the relationship between family, the economy and
working life in today's society. In his book Van Dongen
relates a considerable and diverse body of research relevant
to study of the ways we live in different social contexts
(the family, the workplace, public organisations, etc.)
and of the ways in which we integrate the different parts
of our lives.
an introductory chapter, in chapter 2 the author outlines
a traditional dual approach to daily life: 1. production
(understood as paid work), and 2. consumption (including
leisure activities and unpaid work in the family and the
community). In terms of this conceptual model the trend
has been towards including more aspects of daily life in
the productive or economic sector.
chapter 3 Van Dongen opposes to this traditional dualistic
understanding of daily life a rather different 'integrated
approach to the division of labour' in which 'the daily
life of human subjects is seen as the daily division or
combination of activities or labour processes and of their
outputs/results' (p.27). In this integrated approach, input
capital is understood as combinations of personal, social,
material and financial capital; human labour is the means
of transformation; and outputs are again combinations of
personal, social, material and financial capital. All human
activities are thus understood as complex, and 'the life
course is the 'time path' or 'time road' during which all
individuals are performing different activities, in each
activity transforming the available personal, social, material
and financial capital' (p.31). A particularly instructive
graph on p.34 shows the different allocations of time given
to different categories of activities (leisure, social labour,
personal care, family labour, external education, professional
labour) in different periods of our lives.
studying a variety of models for understanding the division
of labour in modern welfare states Van Dongen describes
his 'Combination Model', based on a broad understanding
of 'democracy' as including a democratic division of labour
within families and organisations.
4, a historical exploration, could have come nearer the
beginning. In this chapter the author charts the evolution
from the strong breadwinner model of the 1950s and 1960s
through the moderate breadwinner model of 1970 - 1990 to
the moderate combination model of 1990 - 2005 in which there
was a more equal division of professional and family labour.
then in chapter 5 comes the 'complete combination model'
(a 'normative future model' or a 'policy model') in which
'nearly all potentially professionally active men and women
combine the basic activities in a balanced way during the
life course, avoiding one of these being threatened or neglected.
During all stages of the life course sufficient time has
to be spent on the different basic activities. So one can
fulfil both professional and family responsibility and can
realise a suitable combination of personal, social, material
and financial capital' (p.178).
particular 'complete combination model' which the author
discusses is compared to other possible models, and then
in chapter 6 'full employment' is defined in terms of both
professional and family labour, a tax system relating to
hours of employment as income is proposed, and child care
and education policy are discussed.
final chapter, 'major results', summarises the content of
the preceding chapters.
not always obvious whether the 'complete combination model'
is a prediction, a possibility, or an ideal to work towards,
but the combination of voluminous survey evidence and theoretical
perspectives makes this an important study in an important
final caveat: the author discusses Citizen's Income (p.255)
only in opposition to his preferred method for maintaining
full employment ('bridge jobs'). It might have been better
to ask what tax and benefits arrangement might best serve
the 'strong democracy' on which the complete combination
model is based. The answer might have been a Citizen's Income
with either a smoothly progressive income tax or a flat
tax - a rather simpler solution than the administratively
complex taxation proposals offered in the book.
Leibfried and Steffen Mau (eds.), Welfare States: Construction,
Volume I: Analytical Approaches; volume II: Varieties
and Transformations; volume III: Legitimation, Achievement
and Integration, Edward Elgar, 2008, 2,176pp, hbk, 1
84720 080 X, £495
three-volume set collects together sixt y-three journal
articles dating from 1974 to 2005 and is an absolute must
for any library, think-tank or university department serious
about studying the welfare state.
introduction is informed by a broad definition of the welfare
state which includes the activity of voluntary organisations
as well as that of the State. It is in general a judicious
and brief account of the development of the welfare state
in Europe and elsewhere alongside studies in the development
of welfare state theory and typology. The introduction and
the collection as a whole are more present- and future-oriented
than past-oriented. Looking to the future, the editors find
an intriguing connection between religious and social policy
developments and they also discuss the possible effects
on the welfare state of the multi-layered nature of modern
government. Their verdict is that change in the nature of
the State and change in welfare states (in the plural) have
always influenced each other and will continue to do so.
I starts with papers on the development of welfare state
theory, follows with some classic articles from T.H. Marshall
on citizenship and social class and Richard Titmuss on the
nature of social policy, and then ranges across a variety
of theory types. There is material on structural functionalism
(which sees the welfare state as the solution to problems
emerging from industrialisation at the end of the nineteenth
century), neo-Marxist theories (which ask about the social
function of social policy institutions and how the welfare
state functions in a capitalist state), the 'power resources'
approach (in which the welfare state is a struggle for power
between different social and demographic groups), the welfare
state as the management of risk (which employs both 'insurance'
and 'solidarity' ideas), and a polity-centred and institutional
approach (which asks how and why decisions about welfare
states are made).
II collects papers on the categorisation of welfare states,
and it starts quite correctly with three chapters from Esping-Andersen's
classic The Three Worlds of Welfare Capitalism. Bonoli's
and other classifications follow, as does recent work on
East and South-east Asian welfare states. The rest of the
volume is on 'transfigurations': the ways in which the world
is changing and the ways in which this is affecting welfare
states. There are sections on globalization, on post-industrialisation,
on Europeanization (i.e., on how greater European integration
is changing Europe's welfare states), and on whether a global
social policy is emerging.
III contains an interesting mixture of papers. The first
section contains John Rawls on distributive justice, and
papers on other justifications for the welfare state: for
instance, on the prevention of exploitation and on the satisfaction
of needs. Sections follow on outcomes, trade-offs and dysfunctions,
and human motivation ( - policy-makers now assume that we
are all self-interested agents rather than altruistic contributors
or passive recipients). Finally come chapters on attitudes
to redistribution, on ethics and social diversity, on gender,
and on pensions and the generational contract.
the introduction in volume I, there is an excellent bibliography
which will be helpful to anyone studying social policy;
and there is a name index, though unfortunately no subject
index. Whilst we recognise that creating subject indexes
takes a huge amount of time ( - the reviewer knows this
from experience) and are often not included in anthologies
such as this, they really are important if volumes like
these are to be maximally useful to students, teachers and
that caveat aside, these really are splendid volumes and
for some time to come they will be essential reading for
anyone seriously interested in welfare states and welfare
state theory. Researchers might not be able to afford their
own sets, but they should certainly ask their university
or departmental library to obtain them.
Moreira, The Activation Dilemma: Reconciling the fairness
and effectiveness of minimum income schemes in Europe,
Policy Press, 2008, ix + 155 pp, hbk, 1 84742 046 6, £65
the UK the 1995 Jobseekers Act made receipt of benefit dependent
on searching for and accepting available jobs, and the later
New Deal provided work and training opportunities for unemployed
people. Most other European countries have seen similar
changes, the universal aim being to 'activate' and 'reintegrate'
this important book Moreira distinguishes between compulsive
'workfare' and an 'activation' characterised by both positive
and negative incentives, and then explains how such activation
relates to Europe's different minimum income schemes. He
finds particularly interesting the variety of relationships
between rights and responsibilities in the different schemes.
a theoretical level Moreira finds helpful Durkheim's theory
of social justice, in which the individual has a right to
personal development. This requires someone's basic needs
to be met, and it also requires people to exploit their
talents so that other people can develop theirs. This theoretical
position coheres with the more empirical material in the
second part of the book. Here the author tests the hypothesis
that minimum income schemes which promote personal development
are more likely to forge positive relationships between
individuals and the labour market. The author develops indicators
for the extent to which a minimum income scheme respects
a person's right to personal development and also for the
scheme's employment effectiveness and gathers evidence in
relation to the indicators. The evidence doesn't confirm
the hypothesis, but it does show that for the majority of
indicators which measure a scheme's respect for personal
development (adequate income, level of discretion in implementation,
opportunities for employment and training, type of sanctions
applied) both respect for the right to personal development
and employment effectiveness can be found together as characteristics
of a minimum income scheme. Only for one indicator does
this relationship not hold. Only if an individual's right
to choose not to be employed is restricted can a minimum
income scheme combine employment effectiveness with respect
for the right to personal development (measured by the other
Moreira suggests that employment and other legislation should
be tested to see whether greater respect for the right to
personal development might lead to greater economic effectiveness.
are two flaws in the argument. Firstly: near the beginning
of the theoretical section Moreira evaluates Van Parijs's
arguments for a Citizen's Income and argues that an unconditional
income unfairly favours those who don't wish to work. It
doesn't, of course. It treats everyone fairly in relation
to the receipt of an income. What does treat unfairly those
who want to work is a means-tested minimum income scheme
which results in 5p of additional net income for every additional
£1 of gross income. Secondly: Moreira doesn't ask
himself about the employment effects of the universal benefit
we do have: Child Benefit. This is the only benefit not
withdrawn as other income rises and it is an important factor
in lone parents' labour market decisions.
book is a record of important research and the conclusions
are useful, but both the theoretical and the empirical material
relates to the situation as it is rather than asking such
questions as: If marginal deduction rates were to be reduced
by a Citizen's Income replacing means-tested benefits and
tax allowance, then would such a positive employment incentive
make many of today's negative incentives unnecessary? We
need Moreira to exercise his critical intellect and rigorous
methods on such additional questions.
O'Brien, Poverty, Policy and the State,
Policy Press, 2007, vii + 280 pp, hbk, 1 86134 799 2, £60
this well-researched study O'Brien locates New Zealand's
social security system, its various reforms, and the debate
about those reforms, in their international context. New
Zealand, like many countries, has experienced both rapid
economic and social reform and also both growing poverty
and income inequality during the last twenty years, and
also like many countries it has experienced rapid change
in social security structures.
historical overview gives us an understanding of the dual
nature of social security provision in New Zealand: a Universal
Family Benefit supplemented by income-tested benefits for
those of working age not in employment. This is followed
by a discussion of growing inequality, of who is at greatest
risk of poverty (families with dependent children, women,
lone parents, and minority ethnic groups) and of the effects
of income poverty (blighted lives and depleted opportunities).
Globalisation and social change are explored and related
to recent changes in the social security system, and in
particular the movement towards a 'core' (income-tested)
benefit with recipients allocated to different categories
in relation to their labour market readiness. Chapters are
then given to successive administrations and the tax and
benefit changes which they have implemented, and in particular
to the greater importance of 'workfare' elements in the
system and the replacement of universal support for children
(Universal Family Benefit) by targeted support ('targeted'
in this book meaning 'income tested' (p.124)). Case management
and an emphasis on paid work have now replaced a system
containing important universal elements, and the author's
verdict is that the new system entrenches poverty for large
sections of the population, and particularly amongst the
poorest families with children.
a pity that the author has decided that he doesn't have
the space to study New Zealand's universal and non-income
tested pension system, as that remains an important contribution
to social cohesion and a significant incentive to save for
one's old age. A book on this would be welcome. Such a volume
might inspire New Zealand's next government to take the
country's own pension system as a model for the next reform
of social security.
Citizen's Dividend: Sharing the Wealth of the Commons
of us, on this planet of abundance, are entitled to a fair
share of society's surplus, to an extra income, not from
what we earn from our labour and capital, but from what
economists call 'rent' for land and resources and government-granted
ancient Athens, qualifying Greeks - free males - received
a dividend from the proceeds of leasing a natural resource,
the silver mines outside the city. Two thousand years later,
citizens of Kuwait got a dividend from oil royalties. Residents
of Alaska still do. And in the ski resort of Aspen Colorado,
a majority of residents qualify for housing assistance funded
from a tax on land. 'Owe' and 'own' were once variants of
we spend immense sums on the nature we use, including sites,
resources, EM spectrum, and the ecosystem in general. Presently,
however, we pay a handful of owners while we should be paying
ourselves. None of us, by exerting any labour or capital,
created valuable nature, and all of us as a society create
its value. The value of location is generated not by what
an owner has put on top of it but by natural surroundings,
by one's neighbors, and by one's society's growth. Hence
this value is ours to share.
with the various forms of 'land' are government-granted
privileges: patents and copyrights, licenses, utility franchises,
standards waivers, and banking regulations (which amounts
to the privatization of the power to create money). The
recipient of such privileges can charge the public for their
use, thus making a profit out of what belongs to us all.
charge for the use of such public goods might make it possible
to reduce or abolish taxes on homes, sales, and earned income.
Most people, owning no oil field or housing estate, would
be better off; and if there is money left over then a dividend,
or Citizen's Income, could be paid.
Luther King, citing nineteenth century reformer Henry George,
noted that such a 'rental' income would be dynamic, that
is, it would 'automatically increase as the total social
income grows.' Technological and social progress continually
push up the values of locations and privileges.
defending the property which justifiably does belong to
individuals, for instance, by not taxing it, to be humane
and loving members of our society we must share that which
is already ours: natural values.
Smith, The Geonomy Society (www.geonomics.org)
automatic stabiliser to avert a depression
current finance-induced crisis has led to a belief that
because the supply side caused it, the solution lies mainly
in supply-side mechanisms. Banks must be bailed out and
huge subsidies given to near-bankrupt firms with little
long-term future. To take up labour market slack, public
works are back in vogue, echoing Roosevelt's New Deal. To
the extent that this will work, it will take several years
to do so. Regrettably, it will not work very well.
are in danger of over-emphasising analogies with 1929. In
some ways, the challenge is greater. Because globalisation
has created a global market system, the risk is the first
truly global depression. In the 1930s, the response to the
financial hubris of the 1920s was tariff protectionism;
in 1932 Keynes himself wrote an article opposing free trade.
Now, we are in danger of diving into an era of subsidy protectionism.
we see signs of 'beggar-thy-neighbour' subsidy competition,
as governments seek to prop up rust-belt or 'strategic'
industries. Announcement of billions of dollars in subsidised
loans to US car-makers has been swiftly followed by plans
to help competing car firms in Europe and Asia. No sooner
have the Dutch introduced a top-up wage subsidy for firms
putting employees on short-time than UK union leaders are
demanding the same as 'the best way forward'.
such subsidy schemes are inefficient and distortionary.
Worse, they are inequitable. Why should governments subsidise
some median earners, with their pensions and healthcare
benefits, but not others, who may be far more vulnerable,
outside the selected industries? Moral and immoral hazards
are plain. The money will go to those most successful at
lobbying or at bringing people out on the streets to scare
the causes, the main risk we confront in 2009, and well
beyond if we are not careful, is one of shrinking aggregate
demand. Fear-induced cuts in investment and consumption
could produce a lengthy depression induced by collapsing
confidence. The animal spirits are chastened and panicky.
Keynesian-type response is attractive; it requires a globally
coordinated stimulus, along with a restructuring of international
financial agencies. But every crisis also offers an opportunity
for innovative solutions. Economists and policymakers must
think out of the box of history.
today's economic system. As a result of economic liberalisation,
and the privatisation and commercialisation of social policy
as well as economic activity, there is systemic insecurity.
We cannot respond to the crisis by rebuilding welfare states
as they were constructed after the Great Depression.
that time, rich societies were industrial economies, in
which contingency risks could be overcome largely through
contingency benefits, such as labour-based contributory
unemployment benefits and sick leave. But such 'labourist'
social security schemes do not work in open, flexible service-based
societies. Even in rich OECD countries, only a minority
of the unemployed would receive unemployment benefits. The
rest would have little to fall back on. The precariat would
be seething, easy prey for extremist politicians. That is
is needed is an automatic economic stabiliser to moderate
demand fluctuations and to reduce the systemic insecurity
that has come with globalisation. My proposal is for every
citizen to be provided with what might be called a stabilisation
grant. This would be paid to every citizen, as a right,
rather than a subsidy to a favoured few in a particular
status or place.
providing a measure of security to all citizens, whether
or not in paid employment, the grant would encourage consumption
and boost aggregate demand, aiding local businesses, products
and services. It would also reduce fear, thereby fostering
altruism, social solidarity and economic rationality rather
than selfishness and xenophobia.
idea of basic income has a long and distinguished pedigree
but it is its potential role as an automatic stabiliser
that makes it intriguingly relevant at this juncture. Keynes
advocated something like it in How to Pay for the War.
If there is systemic insecurity, selective schemes are inefficient
and inequitable. If you bail out bankers or mortgage holders
or inefficient dinosaur firms, you help groups that are
not among the most needy. If you extend unemployment benefits,
you assist those who had relatively well-paid jobs with
good contributions records. The failings of the welfare
system are compounded if eligibility for benefits is determined
by means tests and/or futile job search requirements.
grant must be universal. Unlike in Keynes's time, it is
now feasible to integrate tax-and-benefit systems, so a
claw-back could ensure the beneficiaries would be lower-income
citizens. The value of the monthly grant could be adjusted
in real terms in accordance with the rate of economic growth
and the depth of a recession.
systemic crisis calls for a systemic response. A modest
stabilisation grant would boost purchasing power and consumption.
It would be egalitarian and liberating - which is why several
Nobel-winning economists have been drawn to the idea. Evidence
from cash-transfer schemes around the world shows that they
encourage rather than discourage people to take paid work
where available. And there would be no need for a rise in
the structural budget deficit, since sensible financing
options are available, including the elimination of many
existing wasteful and inequitable subsidies and benefits.
governments could find the political will and courage to
adopt such a solution, future generations would remember
this global crisis as having ushered in a new era of economically
Standing, Professor of Economic Security, University of
Bath, and co-president of BIEN (Basic Income Earth Network),
an international NGO.
financially to the Citizen's Income Trust
Citizen's Income Trust relies entirely on voluntary labour
and on individual donations to carry out its work, and we
are very grateful to those who contribute financially.
is now possible to use your credit card to contribute to
the Citizen's Income Trust's funds by going to:
is still possible to contribute by cheque, of course. Cheques
payable to 'Citizen's Income Trust' please.
Citizen's Income Trust, 2009