UK government should give £10K to every citizen under 55, a report suggests
bbc.co.uk
bbc.co.uk
https://www.thersa.org/discover/publications-and-articles/rs...
Link to PDF: https://www.thersa.org/globalassets/pdfs/reports/rsa_pathway...
Online (on Medium):
https://medium.com/pathways-to-universal-basic-income
Seemingly the path to UBI leads to UBOF:
>The central proposition is the creation of a Universal Basic Opportunity Fund (UBOF): an effort to reimagine how society supports people to live meaningful, contributory lives.
>Its premise is simple: fund every citizen under the age of 55 with a £5,000 opportunity dividend for up to two years, taken at a time of their choosing over the course of a decade.
>The fund would initially last for ten years, with dependent children also eligible for the payment in the year a parent, or both, were receiving it.
EDIT: I didn't see the direct link to the PDF in the original article, not that it is particularly visible, the first sentence is in bold (and is not a link, and the initial part of the second sentence is also bold, but it is a link) removed initial sentence that read:
How nice of the BBC guys to provide not the source.
The article's second sentence is the source - a link to the PDF - and it has been in the article since it was published.
Correcting my post.
On law/crime articles, they don't link to legal judgments. That's partly the fault of the British legal system for not publishing a lot of that material. But there are plenty of times when it is available and it doesn't get linked to.
Hypertext is a thing. One day people will work out all the amazing possibilities.
"The fund could provide the impetus to turn an entrepreneurial idea into a reality. It could be the support that enables a carer to be there for a loved one." "
I'm skeptical of the long term implications of this logic, and this reads as a very neoliberal solution. 416 pounds a month for two years is not a lot of money. Job training and child/elderly care are difficult, time consuming, and expensive. This seems to be why they are prime tasks to be run by the state. Giving people a small cash sum, and telling them to teach themselves new skills so that they're ready for the economy of the future feels ignorant and wasteful.
If you're working a part time retail job that is about to be automated, what type of "job training" can this realistically provide. Or, if you're taking care of an elderly parent, or a young child, this is far from a replacement for more robust social services.
I truly want to believe in a UBI in some form, but I find the language of "entrepreneurial idea[s]" to be a little repulsive. Not everyone can be a successful entrepreneur. Not every poor and middle class citizen can become a successful start up founder and small business owner. UBI could be fantastic but is not a replacement for the once robust social safety nets that are being chipped away at (or decimated) in the US/UK. I am not saying it is the case in this article -- I know little about the Royal Society for the encouragement of the Arts, Manufactures and Commerce -- but anytime I see someone advocating for UBI I think it is worthwhile to interrogate their positionality and their imagination of the future. The silicon valley libertarian billionaire dream of a UBI seems different from someone with a genuine commitment to improving the quality of life for everyone.
There are no quick fixes to poverty, skill gap, and the problems wrought by automation. Looking towards UBI as a panacea feels dangerous in that it can prevent addressing the more structural problems at play.
What I suspect will happen is that people will be able to leave dead-end jobs that are stressful and provide little to no value to them. Which in turn might crash the economy, because while not having the next Juicero isn't that big of a deal, not having anyone picking up the garbage on time is a real issue. Or, it might end up with employers offering a fair salary that fairly redistributes the gains in productivity afforded by modern civilization (I almost wrote this with a straight face). In any case, UBI is not just a money redistribution scheme, it's also a power redistribution scheme, because it gives you fuck-you-money, or at least the next closest equivalent.
This is the main reason I want a basic income. I want persons who have a job to be the same persons who want that job. If nobody wants that job then there is something wrong about that job - maybe it doesn't pay well or maybe the job conditions are horrible. But in any case, I think we will all be better off if our workers are people who want that particular job rather than people who are stuck with that job and can't afford to quit.
All the land is taken, owned, and occupied; and all of the best places for starting your own settlement were /long/ ago occupied, let alone the marginal ones.
I don't want to do any of the above, but having that /option/ gave a default alternative to being an employee and thus meant that there had to be actual benefit in such a relationship.
Has anyone studied potential impacts for health and safety related incidents alone for this? How many tired lorry drivers can be stopped blocking the motorway for 5 hours before it pays off economically.
I agree. I mean, it would certainly enable some people to become entrepreneurs, and that's awesome! But it shouldn't be phrased in a way that people feel forced to become entrepreneurs, and feel worthless if they don't manage to. (That's one of the problems with unemployment "benefits" in many places, which are tied to pressure to find a job, any job, and lose the "benefits" if you "succeed". No wonder many people crack under this pressure and become depressed alcoholics.)
The same goes for worries a UBI might decrease "employment". Um, yes? If there were a UBI I could live off, I might well drop my job and do research/develop free software full time. That would be a decrease in employment but quite possibly a net win for society.
We need to stop viewing everything through the lens of (paid) work ethics.
Cash transfers are neoliberal now? I'm starting to think this word means "whatever I don't like" or "moderate liberal" - it's certainly not within the politics or Reagan and Thatcher (the typical definition of neoliberalism) to redistribute income like this.
> The idea sees two payments of £5,000 paid over two years, but certain state benefits and tax reliefs would be removed at the same time.
> Payments would come from a British sovereign wealth fund in the form of two annual £5,000 dividends, the RSA proposes.
It's not really Universal either:
> applicants would only have to demonstrate how they intended to use the money
Can't walk more the 10 minutes to the shops? No money!
Your friend is lucky, I know several people personally who have been dragged through the courts for months before they were able to get their incorrect assessment overturned.
The stricter regime for both ESA and JSA has created a dreadful gap in the benefits system - people who aren't sick enough to claim ESA, but too sick to claim JSA. Many people with health conditions that vary over time are refused ESA because their condition is quite mild at the time of assessment, then repeatedly sanctioned on JSA because they become too sick to keep up with their jobseeking activity obligations. There appears to have been a particularly severe impact on people with mental health conditions and learning disabilities.
Our benefits system has become overly complex and extremely unforgiving. A relatively minor error can leave someone completely destitute. The services that help people navigate the benefits system are under severe pressure due to austerity cuts. I'm no bleeding-heart liberal, but I think that our benefits system has become callous, unreasonable and ineffective in preventing poverty.
Granted: Nobody’s linked to any papers or studies. But neither have you.
As I said it's not exactly under-reported, that was your cue to search and find something like: https://fullfact.org/news/how-many-fit-work-assessments-are-...
And (to address your other comment) I assume you aren't being literal with your specific example (because the guy you were responding to didn't literally mean people were assessed on their ability to walk to a shop specifically), but yeah there have been reports of people who can't walk very far getting told they're fit for work (For instance this guy: https://www.cornwalllive.com/news/cornwall-news/photographer... from earlier this week)
Where's your evidence?
http://www.independent.co.uk/news/uk/politics/dwp-disabled-p...
https://www.theguardian.com/politics/2018/feb/12/disability-...
Happy now? Or are you perhaps going to try to play the no true Scotsman PR game and claim this doesn't count as real evidence?
If the guy had replied saying he actually did know the person I would have to accept that as true. He didn't.
Despite recent evidence, this isn't The Guardian and I am willing to believe that most people here are honest and don't just make stuff up to suit their political agenda.
To answer your question, two lefty news articles and fakenews.com don't count as evidence, no. His word would have been good enough for me.
http://www.harrowell.org.uk/blog/2013/03/03/the-transition-t...
Years ago I think the LSE ran a study, that concluded, you may as well just close all job centres, and give a no questions asked hand-out instead. There's a stigma attached to bad jobs, benefits, and poor income - and with some of that lifted, it might provide a better seed-bed for some business.
Benefits are generally designed for short-term-ism, you can survive on not a lot, but opportunities are removed. Even basic socialisation becomes hard: you can't afford a drink in the pub.
That being said, I've never been poorer than being self-employed. I know it works for some, and there are benefits, but it doesn't work for all.
The benefits of my ISA (id hit the dividend tax on a single one of my ISA investments)
Pension relief at my top rate - hopefully 40% at my next gig
5 Years NI contributions towards state pension
Not because he says UBI won't work (I'm on the fence about this, because I'd love it to work, but I don't see how you can stop it triggering inflation to the point that the UBI sum becomes useless to live on - but I'm no economist), but because he's really quite far out of the mainstream of economists and it's as if they've picked him solely because he's the only big name pro-Brexit economist - and I'm sick of the BBC dragging pro-Brexit commentators on to speak unopposed regardless of whether they know anything about the subject or how out-there their views are.
Some prior references on Minford: http://www.huffingtonpost.co.uk/entry/brexit-minford-economi... https://www.economist.com/news/britain/21727078-patrick-minf...
That's something I don't get either. But maybe thinking is that it would induce some needed inflation in deflationary times?
If that happens, then UBI is pointless.
(This is not, by the way, a normative statement, it's merely descriptive)
This inflationary pressure probably won't apply to food, because the supply of food is a lot more elastic than the supply of housing. That more people can afford better probably means that more good food gets sold, and perhaps some scarcer foods might come under pressure, but the supply, and thus price, of things like rice and carrots is unlikely to go up.
No, but UBI would enable people to move out of that area to areas with cheaper housing and fewer jobs.
I can imagine quite a number of economic migrants from the North of England who currently live in London would decide to return home and live closer to family in cheaper locales if their overall economic situation was a bit more secure.
That would, in turn, put relieve pressure on the housing market in London and provide some economic stimulus for more deprived areas.
>This inflationary pressure probably won't apply to food, because the supply of food is a lot more elastic than the supply of housing. That more people can afford better probably means that more good food gets sold, and perhaps some scarcer foods might come under pressure, but the supply, and thus price, of things like rice and carrots is unlikely to go up.
I think the price of organic carrots and rice would probably go up a lot. Their supply isn't particularly elastic (and is constrained by access to cheap labor... whose price would go up under UBI). If you give poor people more money one of the first things they will do is try and buy better quality food.
McDonalds would probably take a hit and would likely have to shake their image up to attract clientele in much the same way they did in Australia (where, thanks to a high minimum wage, people at the lower end of the economic spectrum have a higher disposable income): https://www.businessinsider.com.au/mcdonalds-in-australia-vs...
In theory.
The problem is that this amounts to taxing the super-rich to a much greater extent than we do now. The super-rich tend to hoard their money (that's part of the problem!) so even if you manage to do that successfully, you do end probably end up increasing the effective money supply. But not to the extent that the income becomes worthless.
It would have the effect that the value of each individual dollar would go down to a small extent, but everyone would have say 10,000 dollars extra. The effect would be negative for the rich, but positive for the poor.
Quantitative easing seemed similar, but the money was given to the banks who just kept asset prices high - not great for the poor but good for the rich.
Anyone want to "explain it like I am 5" to to why thats such a bad idea?
This means that when the BoE wants to contract the money suply (as it's doing now) it has assets to sell off.
If it printed money and then gave it away then it would be in a sticky situation if it wanted to shrink the money supply again.
Also producing that much extra cash every year would produce a high rate of inflation. This would have very weird effects and would probably be highly unpleasant for everyone.
I agree that it would probably cause innflation, but why not just repeat every ten years? As I say it would devalue money for everyone. It would also give a lump some to everyone. That is going to be positive for the people who need it the most and worst for the people that need it the least.
At a guess, low/medium skilled labour becomes more expensive, because it's no longer required for subsistence, so the labour becomes more about luxury goods, than basic living costs
https://www.povertyactionlab.org/sites/default/files/publica...
That's exactly my worry: not that it causes inflation, but that if everyone is given a sum to cover the cost of accommodation then accommodation prices will just get pushed up to beyond the reach of UBI. As I say, I like the idea of UBI a lot, so will be very glad if that doesn't happen, and interested to read (later on) this and any other studies on this topic!
While UBI would be more efficient (everybody gets a minimum amount of money that they can use towards housing or whatever else), that would mean HUGE losses among the welfare recipients in expensive places -- in London, housing benefit (LHA) can amount to $18k a year for a small family or $30k a year for a big one, and UBI will not fully replace that. The laments about social cleansing will be loud.
It will trigger inflation not only because there will be more money chasing the same goods, but also because wages will rise (if UBI is enough people now have fuck you money) which will have knock on effects on the price of goods up the value chain.
However, the idea that it necessarily has to trigger inflation to the point that the UBI sum is not enough to live on is wrongheaded.
First of all, it might never be set at a level that is enough to live on. E.g., typically when a Silicon Valley billionaire talks about UBI they almost always mean "take all welfare and redistribute it to everybody in the country". That will do jack shit - it will neither raise inflation nor give anybody enough to live on. If it were set at a level that was enough to live on it would hurt - for them. They'll fight that (I dont think people realize that this means that the political support for "real" BI is really very low).
Secondly, rich countries with rich economies would be very likely capable of absorbing the economic shock of everybody having fuck you money - economically I'd do more or less the same thing I do now (write software) if I had fuck you money and I'll bet most other people would too. People aren't going to sit on the couch and vegetate. They will largely still want to build, to be useful and to contribute to society - but hey, iPhones might cost $1,400. Meh.
A a poor person earning 10k a year gets 10k. total: 20k A rich person earning 100k a year gets 10k. total: 110k
Inequality has shrunk from 10x to 5.5x. That's a massive improvement.
It would be difficult to ascertain exactly where the inflationary impact would hit though - there are way too many variables to account for - aggregate housebuilding, inflows of foreign capital, desirability of UK as a place to park capital and live, availability of arable land, potential future availability of oil, etc.
All you could really say is that it would be inflationary. Not how much, not where.
If it were to be brought in it should be brought in at a low level with automatic increases until it's enough to live on. If the inflationary impact is too much for the electorate to bear they ought to be able to vote it down.
People don't seem to understand that you can't create money just by randomly moving it around.
It's the same reason universities have endowments being managed as their own thing.
Also if it's a fund, the money is pre-earmarked for this usage. Taxes -> UBI end up being more easily messed up by politics (see social security vs. your 401(k))
The people the money was taken from could also have invested it profitably. They know that their taxes will be higher down-the-line so it's up to them whether they want to save or spend it.
>'s the same reason universities have endowments being managed as their own thing.
University endowments also seem far to big to me (at least the largest ones do). I suspect it's mostly a prestige/signalling thing. It might be rational on the part of the university if it attracts more donors, but in that case it isn't rational on the part of the donors. They view saving money as the responsible thing to do because it is the responsible thing to do for a human who will eventually retire. The same logic doesn't apply to Harvard.
> if it's a fund, the money is pre-earmarked for this usage. Taxes -> UBI end up being more easily messed up by politics (see social security vs. your 401(k))
I guess this is partly true, but it's easy to get the money out of there with accounting trickery. Just say "To make the fund's investments safer we are going to invest them in government bonds" and then as-if-by-magic you have the money.
It is hard to say where that money would come from - will it be printed? Taxed? Borrowed (interest?)?
To do any of these things at the required scale would surely have unintended effects.
Also as ability to pay for unemployment during a crisis now depends on cyclical income from investments, rather than countercyclical government bonds, it feels like this would collapse when it is needed most.
Issuing more public debt and spending it is (in a low interest environment) not so very different to printing cash and spending it. The creation of highly liquid assets backed by cash that don't pay interest = might as well be cash.
The "sovereign wealth fund" idea is weird though. I don't see the point of the UK creating one - it's not like it has vast quantities of oil wealth it needs to sequester.
Printing money isn't really the issue - it's what is done with it once printed that matters.
It's simply a way of taking a country's wealth and instead of spending it on infrastructure, public services, industry or welfare - it gets spent on assets (usually foreign).
The good parts:
* It lets a small country (e.g. Singapore) exert a stabilizing influence on its economy when it is buffeted by large external economic forces outside of its control.
* It lets a country that has natural resources (e.g. Norway) both A) set some of that wealth aside for the future and B) mitigate the massively damaging effects of dutch disease (a seriously underrated economic effect). This is termed "sterilization".
The bad parts:
* If you buy overseas assets they can be seized. I think this is why Venezuela isn't really capable of building a sovereign wealth fund. If they bought a shopping mall in New York state 10 years ago with their oil wealth it is likely it would simply have been seized.
* If you're putting money into a sovereign wealth fund you're not spending it on the welfare of your citizens. I used to live in Singapore and the contrast between the way it treated its poorest citizens and the amount of money pushed into Temasek is disgusting and shameful.
* Sovereign wealth funds attract corruption like flies on shit and the management of it is where the principal/agent problem reaches its nadir because it's so easy to surreptitiously suck wealth out if you exert control or influence over it. I think Norway's is probably the only sovereign wealth fund in the world that is free from corruption. Even then I wonder.
Since the UK is not a small economy and can absorb external shocks more easily than Singapore and it's not going to suffer from dutch disease what's the point? Creating yet another entry point for financial parasites in the City of London to extract taxpayer wealth?
This is offset by money being destroyed e.g. by repayment of loans (otherwise the money supply would simply explode in a catastrophic inflationary fountain), but overall, it's not impossible to imagine money being created directly into everyone's bank account instead.
Not claiming I can see how to get to that scenario from here, of course.
When there is a lower demand for private debt - usually because people already feel overindebted - money creation is throttled.
Politicians often balance the competing desires of their rich donors (who, however liberal, still want the money supply throttled to preserve their wealth) with that of the electorate (who want a healthy economy that can only be driven by spending) by stimulating the creation of ever more private debt.
This isn't a sustainable compromise and the consequent systemic and societal risks of a huge overhang of unpayable private debts are pretty terrifying.
Economic humiliation correlates strongly with a societal attraction to charismatic "strong man" leaders and, ultimately, fascism. I believe we're watching the beginning of this story and it's about to get a whole lot worse.
Sovereign wealth funds are generally endowed with some kind of income stream, typically the revenue from natural resources, which it then invests and spends the proceeds from. The UK doesn't have such revenue streams lying around, that aren't already paying into the treasury, thus any such funding will deprive the treasury of the same amount, and so the wealth fund won't really do anything, as least on the short term.
And that's without considering the fact that the government runs at a deficit and continously borrows money. Taking a loan to boost your savings is an interesting strategy.
There are all sorts of paths the UK could take to transfer things around and build up a sovereign wealth fund over time, but getting it to a stage where it would be able to pay out billions a year would take decades in the absolute best case scenario (that excludes any of the 99.9% of scenarios where the government "temporarily" taps the fund for some very important political goal that absolutely coincidentally have to be met in an election year).
Naturally they don't do budgets the rational way: by writing in the funding at the same time that the actual law/regulation is being enacted. I really don't understand how's it's feasible to pass such unfunded mandates. If something costs more it should be clearly added, hopefully with limits or automatic scaling (in the case of something like say, requiring that every X see a 'full' response (E.G. natural disasters, murders, etc).
This is like giving small lottery wins. People will think they're rich in the beginning, blow it all and then have nothing to fall back on.
Basic income should be the same as regular work income that comes in once a month for living off.
I don't disagree with your assessment of this being a problem, but increasing overhead by splitting up payments to solve an issue that's inherently behavioral seems counterproductive to me.
And more generally, if the once a lifetime universal grants are competing for budget and theoretical purpose with hardship funds, unemployment benefits and entitlement to free government services, the distributional effects are going to heavily favour the lucky and financially secure over the unlucky and financially insecure.
What I responded to that you wrote, and what the article suggests, is:
> This is going to replace what was regular income with large one time payments.
If they are plural they are no longer one time. And if they are no longer one time, it's just a matter of scope size when discussing frequency. I'm not trying to sound robotic, but there's no functional difference between getting 6x twice a year and getting 1x 12 times a year. The difference is psychological.
So it's 1 payment per year.
Yes it's psychological, but that's the problem people are weak at saving for the future.
It's allowing people to make a mistake 12x bigger.
This is an obvious way to align incentives that I haven't seen before. Negative income tax (NIT) is also something that might be worth looking into: https://en.wikipedia.org/wiki/Negative_income_tax#Implementa...
If the government is saying the cost will be £14.5B then they must think only 1.5M people will sign up, a tiny portion of the population. I don't quite see how they're expecting this to work.
Which is a shame; 10k could still make a significant difference to someone earning, for example, £35k (not a high earner by any stretch) - starting a business, paying for childcare etc.
Only then can debate begin.
And political parties must be compelled to publish their proposals both normalised to the NAO model specification and atomically for the inputs and outputs of specific effects of the rules, especially of housing rules.
In this way I could throw about ideas like my"basement benefit" contribution to a ring fenced home deposit scheme for all mature children living with parents whilst in work. This could be extended for those with parents over the age of fifty five, to build a capital cushion cover for care for parents, meeting with needs such as home modification and such things as mobility. Specifically I like the idea of subsidy for a station wagon or similar practical vehicle, for the adult carer if parents who are willing to give up their driving license.
EDIT: oh, what's a million or a billion between friends?
It's not a government proposal. It's not even a proposal of the opposition, or anyone who would potentially be in a position to actually enact it.
The headline isn't wrong, but the prominence the BBC has given it could trick people into thinking its an official (or at least serious unofficial) proposal.
It's not? I had doubts about the first occurrence of "two payments of £5,000 paid over two years", which can be parsed various ways. But then later it does say "two annual £5,000 dividends", which is clear. Or are you objecting to the fact that it's limited to two years?
Edit: No, reading this yet one more time, I come to the opposite conclusion: I think it really is £5,000 in the first year, then £5,000 in the second year. That sucks.
Instead, you get 5000 in one year and 5000 in the next. Like OP said, this isn't universal, it is only temporary and it's not 10000 a year but 5000 a year.
It this based on anything? Are we hoping they'll do this, or do we know how people typically use unexpected sources of income? Or, is it: "The more stitches the less riches" ?
Appendix 1 of the paper is a hard-to-read "fictionalised accounts" of how the money can be used. I like #2, Kathryn the government debt collector who already felt a great sense of accomplishment is now able to provide even more help.
(I did a quick google and found some analysis of how IETC is spent. It seems that transportation is the biggest thing, but that might be a US-specific pattern).
More likely the fund will be squandered (if cash). If it's in the form of a voucher, it will be ignored.
But let's say every low skilled worker actually wanted to become a skilled-worker, then who will perform the low skilled work?
I don't see the financial sense in it.
Most of "us", as in your peers, those visible to you. Nothing wrong with feeling a sense of purpose.
Most of "us", as in bus drivers, bored security guards with nothing to do, McDonald's cashiers, cleaning personnel who clean in your office between 4 a.m. and 6 a.m. so you never have to encounter them, would they be depressed and forlorn without the "purpose" of their awesome jobs?
It's also a disincentive from becoming a wealthier earner, which is _exactly_ what UBI is meant to address (among other things).
Instead of pretending that our iPhones were all just built by magic Chinese robots (or soon will be), the UK could instead decide to enact policy changes that grows rather than bleeds our manufacturing sector.
I don't think policymakers understand the long term risks associated with trade and currency policy pushing manufacturing to places like China. Building a dense industrial ecosystem - exhibited in all its glory in markets like Huaquingbei - is simply impossible in the UK under current "free" trade policy. This means startups like OnePlus (which grew out of Huaquingbei) won't and can't work in the UK - which should worry people.
One day we're going to wake up and find out that China can switch off the flow of hi tech goods to the UK overnight - components and finished goods alike - and the rude surprise will be that industrial ecosystems take decades to build. Neoclassical economic models buries this problem in assumptions, so most economists are just as blind to this risk as they were to 2008.
The fact that we let our industrial ecosystem rot while they steadily built theirs up will come, if we get cut off, in the form of a highly inflationary shock and ultimately a shortage of hi tech goods.
Perhaps then the notion that trade and currency policy created to appease banks and landowners ('unfettered trade'), rather than companies that actually make things and created jobs ('protectionism'), wasn't such a great idea.
Enacting basic income (which will, by its nature, also be very inflationary) with those kinds of medium term risks hanging over us seems unwise when its impetus - the shortage of good jobs - was artificially driven by bank friendly trade policy that can't last forever.