A Basic Income

John Rentoul, a journalist who often writes common sense articles, wrote one concerning the idea of a “Basic Income” which he considers a very bad idea. http://www.independent.co.uk/voices/basic-income-pilots-scotland-ubi-glasgow-finland-canada-ontario-switzerland-referendum-refuses-to-a7505561.html

In terms of the State paying a basic income to everyone regardless, I would agree it not only doesn’t make economic sense but it also represents the worse aspects of a “moral hazard” for society as a whole. There can never ever be a “something for nothing” in any transaction between the State and its citizens, there must always be a balance struck between rights and obligations for both sides.

There Is a Need

As I have written previously, there may well be a need for our society to function in the near future on a very different basis with regard to “working” and being “in work” compared to the way it has in the past. The driving force for this will be a rapidly changing economy where “new skills” will have to be picked up by the workforce often throughout their working lives. This in turn means that any government will have to position their tax and spend differently from the way it is done today.

If we are clear sighted today, our current situation is just not sustainable. One of the reason that the UK economy has performed well in recent times is wholly down to a lack of investment in both people and technology plus a downward pressure on wages which has led to sucking in hundreds of thousands of foreign workers either because they are ‘pre skilled’ or just plain cheap. As the Brexit vote demonstrated, this is socially no longer acceptable for the majority of British people and established immigrants who have to deal with it where they live. Additionally, such an approach has already run its course leading to intolerable pressures on housing, health and education resources where such economic migrants settle.

The main point is that whilst you may disagree with some of my thinking, the harsh realities do not lie, change has already started and it now needs to be managed efficiently for the benefit of all within the UK. Such management cannot and will not come from businesses big or small, they have their own narrow interests that do not include any concept of the “Greater Good” therefore it must fall to Parliament and the Government of the day to shape and impose the changes required.

Tax and Spend

The consequence of this will be a change in terms of the way that government financial support flows into the workforce, both those working, studying and available for work, to counteract an tendency for sections of society to act as ‘Luddites’ in the face of inevitable change and thereby cripple the economic progress of society as a whole. The reason for this is simply that the “digital revolution” has only just begun and the impacts will echo well into the future as previously thought “safe jobs” fall beneath its scythe and even the middle classes are thrown out of work.

I have postulated previously the idea that in economic terms, society will become divided into three tiers, those fully employed paying income tax, those on ‘benefits’ because of age or disability and a new category of those who combine part time voluntary work with study for future career development. Such a structure implies that taxes will rise, the existing welfare structure will continue and those in this new group will receive “enhanced benefits” rather than any “basic income” to recognise their voluntary works plus, they will get free training and education. So, what this means is less the State paying a basic income and more a ‘workfare’ type scheme in the sense that people who fit in this category are not expected to be there for extended periods of time, their status is seen as transitional and these payments should not become a disincentive them from doing full time paid jobs.

Other Implications

This represents a massive change because it implies that training and education services must also change dramatically to meet a different demand. We seem to have seen a massive expansion of universities and I suspect that if we view ‘university’ as meaning academic some are surplus to requirements so these resources need to be ‘repurposed’ towards high value training which means that they will probably need to be staffed differently. If this is to be so it also means that instead of moaning and bitching about a ‘lack of suitable candidates’ for jobs, industry of all sizes need to get heavily involved in determining what course content should be and if appropriate, providing training resources to support their aims.

This in turn will need a major program to “teach the teachers” because we don’t want the situation repeated where our primary and secondary schools are expected to offer say IT related courses but lack the teaching staff with the appropriate knowledge to deliver them. The key point here being that whether in the public sector – universities and further education colleges or in the private sector – employee training budgets, there are already substantial resources available but they really need to be redirected to achieve the maximum economic benefit. Obviously there should/needs to be a pilot scheme tried in a geographic area to see if it works and fine tune how it can work best for all interested parties – the dreaded “stakeholders”. It goes without saying that there will be lots of opposition from current vested interests to be overcome.

On the “workfare” side of the equation, it may well mean that many jobs and industries which currently offer low skill with low pay jobs become eliminated but this will be no bad thing because the aim should be to increase the quality of the service delivered plus reserve high skill jobs for the fully trained. If we take Health and Caring services, there are many activities which we can describe as being “face to face or user facing” activities that do not require expensively trained doctors or nurses to perform, these can be carried out by suitably screened and trained voluntary workers but clearly, such use of volunteers would wipe out both existing jobs and businesses.

There is another factor that some may find contentious but would be highly necessary, the introduction of a fraud proof identity scheme to provide proof of eligibility for any payments and access to resources such as training plus enable people to switch between welfare, training and full time work seamlessly. It will also serve to squeeze out the black economy especially if integrated with electronic banking in what is increasingly becoming a cashless society.

Conclusion

Whilst the idea of a Basic Income paid to everyone is obviously nonsense if only because and ignoring the economic cost of it, once such a scheme was in place its value would soon be discounted by all who receive it. No government should undertake what amounts to ‘reckless’ spending such as this because once implemented it would have distorted the economy and consequently as it would mean “taking something away” from citizens, would become impossible to dismantle in the future should you need to do so.

However, the State should never shy away from using its funding ability to encourage through modest incentives, beneficial behaviour which quite modest payments can achieve. Speaking as an OAP who is dependent upon the State Pension, relatively small amounts of money do make a big difference in fact and having had periods when working of earning very well, are far more significant than when you are living “high on the hog”.

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