A market-driven approach to Universal Basic Income

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By now most Liberals are convinced of the moral impetus to eradicate poverty, and many are now realizing that the easiest way to resolve this is to “give people money”. Slowly, we are detaching ourselves from the idea that people should be forced to work in exchange for their rights – and waking up to the need to meet Socialist means for providing Social Security (large, state-driven delivery models) with a Liberal alternative.

A Universal Basic Income is not a panacea, but it’s a surprisingly useful tool for delivering both Liberal outcomes and meeting our Human Rights obligations. And with a market-driven approach, we can embed it in society, free of the partisan nature of British Politics.

Step 1: Create a National Basic Income Fund. This is important – it’s tempting to break up the fund, but you’ll see later why that will create problems. Model it on the Norwegian sovereign wealth funds, or base it on the UK National Insurance Fund. I don’t mind; this sounds like something other people would enjoy arguing about. Just create it.

Step 2: Divert tax revenue into the fund. Again, I don’t mind where this revenue comes from – a Land Value Tax? Cool. Increase in Income Tax? Alright then. Don’t care, and in the medium term, it’s largely irrelevant. What matters is that we sell this as an investment in the future of our country – into jobs, into people, and even into lower taxes in future.

Step 3: Let the fund invest. We mostly need to let them get on with this – maybe some broad rules around ethical investments, but mainly the fund needs to start investing in growing the fund. This is standard stuff, boring, money-making money moving on.

Step 4: Start paying out a Universal Basic Income based on a percentage of profits of the fund, as if it were a dividend, and set this in law to be the lesser of that percentage or 60% of median income. This is gonna start out really small – maybe only beer money. But that’s entirely by design – as the fund grows, the payments will grow, and the economy will adjust gradually to this new reality. Politicians can argue over the best way to increase the size of the fund, the best taxes to use, whatever – once people start getting that payment they’re not going to want to lose it. It’s theirs – they have a right to it, like the NHS or state pension (btw we’ll probably have to deduct UBI from state pension until it subsumes it entirely.).

As the fund grows, we should reach a basic income, and along the way, we will see efficiencies. Welfare will become a much smaller department, specializing more and more on people that need additional assistance over and above the UBI. Councils will have to dedicate less of their budgets to resolving poverty-related issues in their area. Police will spend less of their time arresting poor people for petty, poverty-driven crimes.

A Universal Basic Income is the ultimate investment in Britain because it is an investment in the British people. Let’s bring the well-tested and ruthlessly effective market-driven investment knowledge and experience to the table, and direct it at finally eradicating poverty.

* James Belchamber is Chair of South West Birmingham Liberal Democrats and runs the Lib Dem Digital forum.

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55 Comments

  • Taking each of those four stages…..

    1) Out of what? The UK has had a budget defict in all but 2 of the last 22 years.

    The National Insurance fund is largely illusory – “The National Insurance scheme is financed on a pay as you go basis with contribution rates set at a level broadly necessary to meet the expected benefits expenditure in that year, after taking into account any other payments and receipts, and to maintain a working balance.” (NI Fund account 2019). (though the fund is above the estimated min required)

    2) From where? See the point about budget deficits above. Sure you can increase taxes to do this but you’re not realistically going to be able to do that on any scale. The NI fund operates with around £25-30bn working balance – that is around what the furlough scheme would costs for 3 months.

    3) Fine – what investment returns do you think you would get. Say 10% which is a very approximate average of pension fund growth over the last few years (pre Covid at least). On a £30bn fund like the NI working balance that gets you £3bn a year. For comparision about half a penny on income tax.

    4) If you then pay just a proportion of those profits as a UBI then you are paying out even less. Suppose you say 2/3rds. That gives £2bn to pay as a UBI. Split that across say 30 million recipients and your in the region of £1-2 per week.

    As a concept I really like UBI but the economics of making it work in a meaningful way seem really problematic.

  • James Belchamber 18th Apr '20 - 11:44am

    @Hywel tax more. It really is as simple as that – other countries have higher tax/gdp ratios than the UK so there is a lot of room for growing the tax base. Eradicating poverty and providing a universal, automatic safety net stopping anyone from falling into poverty is a good justification for this.

    And it would be nice, as a generation, to hand something positive to our children.

  • James, I agree with you about the tax/GDP ratio as indeed the LD’s used to as a Party view.Our proposals for a small Income Tax increase and higher taxes on higher earners were in fact very popular with our voters in 1997, 2001 and 2005 when we had our 3 best elections of the last century. But then Nick Clegg turned us into a smaller state, tax cutting Party. Indeed even before that, when Ming was temporarily Leader, I remember hearing him say of me to a colleague ” ..but he’s a Socialist..” Which incidentally is as untrue as saying that I’m a ‘Liberal’ in the free market Economic Liberal sense that Nick and his team were.

    However Hywel’s factual provisos remain very true and cannot just be dismissed as irrelevant detail. Furthermore, if in fact we were in a position to increase taxes in Government, would setting large sums aside, to provide an unconditional basic income for everyone at some undetermined far distant future point be the priority? Or would we first seek to undo the hugely damaging immediate effect of Coalition policies on NHS, Education, Police, Local Government etc? After that we might start to move towards closing the average 30% gap in what we spend on Health compared to equivalent Western countries (50% less than Germany).

    The latter course would be my priority as a Social Liberal, before seeking to give everyone enough money so that they can choose not to work -as you suggest in your opening paragraph. I’m also intrigued by your suggestion that ‘Liberals are now realising that simply giving people money’ is the way forward. In my experience most people who describe themselves as capital L Liberals also tend to recite Gladstonian incantations about Free Trade.. Free Markets… smaller state… lower taxes….Samuel Smiles style self help…. rather than advocating for much higher taxes and state largesse on a scale never seen before in any democratic country.

  • Peter Martin 18th Apr '20 - 1:01pm

    Hywel is quite right when he says:

    “…. the economics of making it (the UBI) work in a meaningful way seem really problematic.”

    But for the wrong reasons.

    As the Govt’s response to the Covid 19 oubreak shows, a ” a budget deficit (as we have had) in all but 2 of the last 22 years” doesn’t matter in the slightest providing inflation is under control. We don’t need a Nowegian style sovereign wealth fund (its inapplicable to the UK) nor a new UK National Insurance Fund. There isn’t one anyway! Not even an old one. Does anyone seriously think the Govt saves up our NI contributions so it has enough money to pay out from “the fund” when needed?

    Yes, we could afford a small UBI but that wouldn’t solve any problems. To introduce one on that basis would be tokenism. A large UBI would, on the face of it, solve some problems but you’d be up against human nature. A payment of a reasonably large UBI would be a strong disincentive to the working population. If it were large enough then there would be no need to work at all. We can look at how lottery winners respond to having large sums of money at their disposal for evidence on this. Some may carry on working but most don’t.

    If it were moderately large with extra taxes applied on incomes to “pay for it” then it would make sense to take the UBI and top it up with cash-in-hand work. The black economy would boom but the legitimate economy, and we all know which is the one that matters to us, would collapse. There wouldn’t be anyone driving the trains or the buses or running the care homes or even serving pints in the pub!

    We’d have to import workers from Romania to do just about everything. But I’m sure most people on LDV would argue that Romanian workers should qualify for the UBI just like everyone else so that idea wouldn’t really work either!

  • James Belchamber 18th Apr '20 - 1:13pm

    @Paul Holmes I accept that Liberals rarely find consensus, but if someone sees eradicating poverty as “largesse” then I’m pretty sure that marks them out as “not Liberal”. Liberals should not strive to ensure people don’t have to work to enjoy life, but we should strive to ensure people don’t have to work to have a basic standard of living (if this weren’t possible then it would be something Liberals would have to grudgingly accept – and early Liberals may have believed it wasn’t possible – but it is possible, so we don’t).

    Social/Economic Liberal is meaningless in this context – believing that some people “deserve” poverty (even by implication) is Conservatism, and believing they don’t deserve it but that it’s bad/futile to fight some natural order that leads to it is conservatism.

    Between Liberals the question should be how best we eradicate inequality (specifically, unequal freedom) as well as making people the most free (Liberalism is not an all-powerful monarch but universal monarchies in harmony etc etc). The free market is a tool for achieving this and Liberals should only support it so long as (and as much as) it achieves those aims.

    (Note: I am very specifically not saying that you are not Liberal if you don’t support a UBI. But you need to have an alternative proposal for eradicating poverty – and there are, of course, many competing and entirely Liberal proposals. UBI stands or falls on it’s merits alone).

    On the subject of healthcare/education/police/local government I don’t see this as an either/or – we have the capacity to do both. My model would be first and foremost an investment vehicle – placing public money in the hands of a body responsible for achieving returns on that investment and distributing a share of those returns to the population. This is by necessity a long-term project, maybe taking decades before we start reaching that 60% mark – but that’s what they say about the best time to plant trees, isn’t it? In the mean time we obviously would need to continue with attempting more targeted interventions, despite their failings.

  • James Fowler 18th Apr '20 - 1:19pm

    No one has really answered Hywel’s points except in rather vague Corbyn or Abbott-like generalities that it will come from somewhere (probably the rich) which I think is indicative.
    I’m favour of taxing the rich more, especially through taxing their property, but the idea that this would be enough to provide say 40 million people over the age of 18 and under the age of 65 with a meaningful universal basic income doesn’t stand up. Giving everyone just £500 a month works out at £240 billion a year. Even if you get rid of all other benefits (simplicity is admittedly a major bonus of UBI) there’s still about a £100 billion of new money to find. The UK could probably get that sum by dramatically increasing basic income tax (the current take is about £340 billion) but then we’re back in Labour’s absurdity of taxing relatively low earners and then ‘generously’ giving them their money back. Meanwhile, employers take note of universal doles and use them to quietly cut or freeze wages. In my view the task for liberals is to ensure that taxes on labour and capital are a low as possible and taxes on land are high as possible.

  • Peter Martin 18th Apr '20 - 1:23pm

    @ JoeB,

    “We are standing in it. ”

    No we aren’t. We standing on rocks and earth. That’s all. Sure, you can tot up all the supposed values of each and every acre and arrive at some stupendous amount, several trillion ££, which would appear to be more than enough. But the trillions don’t really exist. They are just valuations. They are a mirage which will very quickly disappear as a heavy handed taxman approaches!

    Some small LVT and a light touch taxman might make sense. These wouldn’t affect the valuations significantly. Many countries do have such a tax. But nowhere do they have anywhere near the dramatic effect which the Georgists dream about.

  • James Belchamber 18th Apr '20 - 1:49pm

    @James Fowler let’s not throw around insults 😉

    To be more specific, I’m not entirely interested in how we raise the money – income taxes, land value tax, corporate tax, whatever. But I won’t pretend we can simply squeeze the rich – everyone will have to pay, and the average person will have noticeably less cash at the end of the month. At least, to start with – good governance would involve ensuring more people are net contributors and less are net beneficiaries. This is one of the reasons that I propose a gradual, market-led approach to this – we can ease in tax rises and then start the payments. This allows us to work out the kinks, learn from our mistakes, start paying out dividends and then have a public debate about how fast we want to accelerate this.

    Undoubtedly, this would cost us collectively a lot of money. But when persuaded of the merits we often spend lots of money on things, so there is precedent.

    There is definitely a case of “taking money, then giving it back” – and this can be framed cynically. The reason a UBI does this is simply because it ensures that when people are no longer earning they don’t need to apply or be means-tested to start receiving an equivalent – the money turns up each month, universally. Imagine if you will that every time someone on Universal Credit didn’t get paid on time, anyone in full-time work also didn’t get paid on time. And then consider how effective those on middle-income are at “reminding” the government to get their house back in order 😉 universal means there’s not a group of people vulnerable to political headwinds.

  • James Belchamber 18th Apr '20 - 1:50pm

    Finally, I note the point about pay cuts. This is actually a feature, not a bug, and will have some interesting effects:
    – People who like their work will probably continue to do the job with lower pay rises (that don’t keep up with inflation) since it’s being topped up by a UBI. Indeed, if we place the burden of taxation on businesses then we might do this in exchange for gradual pay cuts, meaning for most people their gross pay will be neutral.
    – People who don’t like their work, or elements of their work, will be free to leave their jobs. This is a MASSIVE gain for freedom – gangmasters become powerless in the face of UBI and businesses need to make even unskilled jobs (which we have only very recently come to appreciate, and are as likely to lose appreciation for just as quickly) attractive – both in environment and compensation.

    Choosing how to engage with the economy (with the option simply to not, so long as you are happy to live without nice things) is a big selling point for UBI.

    I predict that the biggest economic change over time with UBI would be a massive drive towards automation where it’s possible and a massive improvement in pay and working conditions where it’s not. Employers will simply no longer be able to trap people in wage slavery and extract productivity from them – instead, they will have to treat them like people.

  • Tony Greaves 18th Apr '20 - 3:59pm

    Too clever.

  • Peter Martin 18th Apr '20 - 4:17pm

    @ Joe B

    “The real economy is based on material goods that are produced from the application of human labour to raw materials….”

    Yes you know very well I’ve always said this too.

    ” …..and the occupancy of land.”

    It’s more the ownership, and the control that comes with it, than the occupancy.

    “Irving Fischer called it the Money Illusion”

    I wouldn’t quite put it like that but certainly there needs to be a better understanding that money is just an IOU of government. On this basis, it’s not reasonable to expect landowners to pay in someone else’s IOUs which they don’t have anyway. If you think they own too much land, then demand your taxes are paid in % of land owned but give them the option of buying it back. If they choose the latter it’s just the same as paying a tax.

    “Throughout a persons lifetime the great proportion of their earnings is utilised in servicing mortgage debt…..”

    Even when mortgage rates were high so was inflation, especially house price inflation, higher too. Overall mortgage borrowers haven’t done too badly since WW2 in the UK.

    “…or rents.”

    It depends on the level of rents. And the political system. The controlled rental system in Germany has always worked well. Thatcherite laissez faire economics which puts vulnerable tenants into the hands of profit seeking landlords doesn’t work well.

    “It is here that what Marx called surplus value is primarily captured in the form of debt interest or rents….”

    You’re confusing Marxism and Georgism. Surplus value, according to Marx, largely arises from the difference between the price of goods sold by a capitalist and the wages paid to the worker.

  • Paul Holmes 18th Apr '20 - 5:34pm

    James -if you want to eradicate poverty via cash handouts then Targeting those in poverty is a more effective and more affordable approach than paying a Universal Basic Income to absolutely every adult regardless of need. Especially as it would have to be quite a high level of payment if it was to really cover the needs of all those in Poverty.

    Neither do I think that setting up some indefinitely long term solution is a satisfactory answer to problems of poverty now and over coming decades or that you have realistically addressed the source for the huge amounts of money that would be needed to fund all this.

    As for the very different views of Economic and Social Liberals you may choose to deny that they exist or matter but that doesn’t alter the fact that that they do exist and lead to very very different views on policy. Even, in the Netherlands for example, to entirely seperate Parties where Proportional Representation allows for such a luxury.

  • It’s one thing to say ‘tax more’ but you need to put some numbers on that.

    The article linked to about a sovereign wealth fund above talks of creating a fund of £100bn over ten years.

    Suppose that fund existed and was generating a 10% return. That’s £10bn for a UBI – which would create a UBI of £333 per person (based on massively conservative 30 million recipients). It’s not very much – and that would only be after 10 years.

    The usual LVT solves everything idea is out in force as well! First I’ve never seen anyone argue that LVT was to be a completely new tax stream but a replacement for other taxes. That has a lot of merit to it but it’s not going to generate the sums needed.

    If you want to make this case you have got to put some numbers on it. How big will this fund be after 5 years (ie the first election), 10 years, 20 years and 50 years. What will be the UBI being paid out at that point.

    At the moment – by your own admission – “everyone will have to pay, and the average person will have noticeably less cash at the end of the month. At least, to start with…”

    That’s a terribly unattractive pitch to make to the electorate for a point 5 years hence!

    Also “But when persuaded of the merits we often spend lots of money on things, so there is precedent.” This proposal is not doing that though. It is specifically talking about NOT spending money but putting it away to build up a long term fund (which will never be spend – just using the investment income).

  • James Fowler 18th Apr '20 - 8:52pm

    @ James Belchamber: I like to push people on what I see as weak argumentation but I really wouldn’t want to cause offence. Nothing here is personal.

    So, with that in mind I’m going to take issue with the ‘UBI is inevitable/desirable because automation/AI is going to make us all unemployed’ line. The fallacy here is akin to the ‘lump of labour’ argument used in anti-immigration rhetoric, but there are also serious problems with historical precedent. Successive waves of automation since the 19th century have destroyed jobs but also created new ones. The new jobs are far more productive, so wealth and ease have risen. It’s all different this time apparently, but the historical burden of proof lies with the proposers to explain why.

  • Hywel,

    “I’ve never seen anyone argue that LVT was to be a completely new tax stream but a replacement for other taxes.”
    This is the case. LVT is not about increasing taxes. The level of taxes is set by need and the size of the economy.
    LVT simply seeks to collect for public use that surplus-value which arises out of the co-operative efforts of the society as a whole rather than individual effort. The corollary to that is it seeks to minimise the collection of any unnecessary levies on income generated as a consequence of individual labour and effort. The objective is nothing less than the elimination of continuing poverty in a world where technological progress coupled with the specialisation of labour has produced an abundance that can satisfy even the most avaricious of appetites.

  • James Belchamber 18th Apr '20 - 9:19pm

    @James Fowler I didn’t actually make that argument 🙂 and I don’t believe that automation will cause long-term mass unemployment (though disruption caused by automation can and will cause spikes in unemployment, like any other disruption).

    My argument was actually the reverse – that a UBI will _cause_ a spike in automation because previously exploited workers will suddenly have the option to simply quit without fear of poverty – and companies will have to respond by spending money to retain them or (where practical) replace lost workers with automation.

  • James Belchamber 18th Apr '20 - 9:30pm

    @Paul Holmes The problems with any targeted, means-tested benefit are that it takes time to kick in, it doesn’t reach everyone in need and the next government can strip it out fairly easily. UBI automatically targets those in poverty as net beneficiaries, kicks in instantly and would be as hard as any other universal benefit to roll back.

    As for the Social/Economic Liberals thing; I can only say it as I see it. If you are a Liberal that doesn’t see the ideological imperative to eradicate inequality you are a banana sticker on a lemon.

  • But James you say yourself in the original article that your [incredibly expensive] UBI system would ‘start really small’ and grow over a lengthy period. So criticising the time it would take for means tested benefits to kick in seems strange to say the least. Especially as that system already exists and ‘all’ that would be needed in your ideal world is for a Government to decide to double or treble or quadruple the payment levels to immediately have an effect.

    As for what you term the ‘Economic/Social liberal thing’ as you see it, I suggest you read some of the output of Centre Forum, Liberal Reform etc to see what one modern strain of Liberal thinking advocates and how much in tune it is with Gladstonian Liberalism. It will help you understand why Clegg, Laws and Alexander acted as they did in Coalition.

    Personally I’m neither a banana or a lemon but joined the SDP in 1983 and was a founder member of the Liberal Democrats in 1988.

  • James Belchamber 19th Apr '20 - 6:56am

    @Paul Holmes kick in when they need the benefit, not the time it takes for the policy to establish. We’re talking about building something that sustains across years and decades here, unlike here-today-gone-tomorrow traditional welfare. It will take time to build but good things do take time to build 🙂

    I am fully aware of the views of Centre Forum and Liberal Reform 🙂 I stand by what I said. Liberalism means something, it’s not just a label that can be stuck on anything. Believing that some people “deserve” poverty is Conservatism, and believing they don’t deserve it but that it’s bad/futile to fight some natural order that leads to it is conservatism.

  • Peter Martin 19th Apr '20 - 8:06am

    @ James Belchamber,

    “Create a National Basic Income Fund”

    This will be, presumably, be owned and administered by the Government and used to invest in industry, commerce and finance. The profits will be used for the benefits of the British people. You suggest a UBI. Although it doesn’t have to be. The proceeds could be used for whatever the democratic government of the day wanted them used for.

    So how is this different from the Socialist concept of nationalising some or all of the means of production and exchange?

    @ JoeB,

    “Money is not just an IOU of government. It is mostly demand deposits at banks ….”

    You may have noticed that the Americans use the dollar and we use the pound. That’s because the dollar is ultimately an IOU of the US government. The pound is an IOU of the Westminster government. Sure, the same bank can operate in both countries but they’ll fall into line and use the currency of issue. Dollars can only truly be created by the US govt. They can create as many as they like. It is their IOU. Others, including the banks, might like to do the same. The problem is that its illegal and the penalties can be quite severe!

    What banks can do is use the dollar as a measure. Rather like an inch or a metre. But that doesn’t change anything. The dollar is the monopoly creation of the US govt.

  • Peter Martin 19th Apr '20 - 8:39am

    @ James Belchamber,

    ” I note the point about pay cuts. This is actually a feature, not a bug, and will have some interesting effects…..”

    Interesting? Possibly. Predictable? Very likely. If everyone has less to spend the economy will slow. Stock will accumulate and remain unsold. The government’s revenue will fall as it always does when the economy contracts. So raising taxes, which is as you say the equivalent to cutting real pay, is very likely to be counterproductive.

  • James Belchamber 19th Apr '20 - 10:29am

    @Peter Martin cutting real income for many people, and raising income (and income security) for many others. Wealth redistribution tends to boost consumer spending.

    Pay cuts != Income cuts, mind – careful of the gap there!

  • Peter Martin 19th Apr '20 - 2:34pm

    @ James Belchamber,

    I’m not clear on what you mean. Yes, if you tax the rich, who are less likely to spend, and immediately increase payments to the less affluent, who are more likely to spend, then aggregate demand is likely to increase. This, potentially, can be reflationary, with the proviso that there could be a danger of inflation.

    But, as I understand your proposal, you are expecting quite a time lag between raising the cash (Your Step 1) and making the payments (Your Step 4). Even then the proceeds are likely to only be “beer money”. What is going to stop the economy slumping in the meantime?

    It’s all a very round and about way of Nationalising whatever it is that your going to be “investing” in! It’s not the recommended way but it is interesting that some Lib Dems are thinking along these lines!

  • Forgive me if I repeat what I wrote that appeared on Saturday, at the tail end of the thread on Five Ideas. I baldly asserted that most talk of UBI starts at the wrong end — how do we get there from here? We seem to propose wriggling past this tricky bit, and then trying to dodge another. Have we considered where would be a good place to be, and then tried plotting a route back to today’s starting point? Lets try something radical, and bypass amelioration!

    What I proposed was that Parliament should institute a National Income Dividend (N.I.D.) The annual Budget would declare that for the coming year a certain percentage of last year’s National Income would be distributed in equal portions to every adult residing in the UK, through the coming year. The percentage might change annually, to satisfy the electorate’s demands. The Chancellor of the Exchequer would decide.

    The N.I.D. would be treated as simple Income, and taxed accordingly. And the rates of Income Tax would also be adjusted, according to the colour of the Party in power. Most so called Benefits would be abolished, as being replaced by the new N.I.D.

    In this way the balancing of reward and need and desert would be determined not in arrears, playing catch-up, but largely in advance. The N.I.D. would be in effect a U.B.I. Our party would shape Income Tax so as to secure that narrowing of the gap between rich and poor that I think we now all desire (as well as millions in other parties). That all, rich, middling, and poor alike, would pay some income tax, would ensure that everyone was a contributor to his or her country’s wellbeing, and all stood proud, as Income Tax payers.

    It will be fiddly for a year or two, getting this set up. But there will, surely, be great reductions in the cost of getting and dispensing government revenue, once means need not be tested before the N.I.D. can be received. Whole forests of wood pulp will be spared.

  • Dilettante Eye 19th Apr '20 - 9:23pm

    There’s a fat-berg blocking the sewers in a part of London, and it needs removing.

    If I opt not to go down there and remove the fat-berg your UBI will pay me £2,500 per month.

    If (for some unimaginable reason!), I opt to go down there and remove the fat-berg on a monthly salary of £1,400 per month, you will top me up with £1,100 to bring me up to £2,500 per month.

    Please explain how, (and who in their right minds ) will remove that fat-berg, under your cash for free UBI system?

  • Daniel Walker 20th Apr '20 - 7:01am

    @Dilettante Eye “I opt to go down there and remove the fat-berg on a monthly salary of £1,400 per month, you will top me up with £1,100 to bring me up to £2,500 per month.

    Your hypothetical fatberg worker would be on £3,900 per month (less tax). Please see The Cost of Basic Income: Back-of-the-Envelope Calculations.

  • Peter Martin 20th Apr '20 - 9:13am

    “Your hypothetical fatberg worker would be on £3,900 per month (less tax)”

    Less how much tax?

    I think I might settle for the £2500. No tax. No Sewers. No Fatbergs.

    If I needed a bit extra I’d do a bit of buying and selling on eBay. No income tax. No VAT!

  • James Belchamber 20th Apr '20 - 9:31am

    @Peter Martin awesome! The water company will either need to find someone that does want the money, or find a compensation package that persuades you to go down there after all.

    As a Liberal this is the best of both worlds – people paid what they’re worth to society, with the freedom to not go pick at fatbergs for a living if they want their kids to eat.

  • Dilettante Eye 20th Apr '20 - 9:54am

    James Belchamber

    “The water company will either need to find someone that does want the money, or find a compensation package that persuades you to go down there after all. “

    So at what price monthly salary would you James Belchamber, consider going down there fully suited with a chisel, in the safe knowledge that you don’t even have to roll back the duvet to get £2500 per month?

    For reference, I would consider taking on the job for a salary of £15,000 per month + my free £2,500 per month, but if I did what tax would I pay on my £17,500 per month under your UBI system?

    I need to know my monthly take home pay, before I start suiting-up?

  • I prefer valuing all contributions that members of society make more equally so for instance those on the front line fighting Covid 19 are more generously rewarded along with council workers, teachers, carers, families bringing up children etc. Even those presently out of work can make a valuable contribution to society in voluntary contributions such as landscape enhancing. So we have a reservoir of “jobs” that anyone can do and be paid accordingly. Only those who can’t should receive benefits.

  • James Belchamber 20th Apr '20 - 11:37am

    Where did £2500/month come from anyway? I’m not proposing we provide a UBI of nearly that much, nor would I support one.

    60% of median income is around the state pension rate, ~£135/week.

  • Nonconformistradical 20th Apr '20 - 12:03pm

    @James Belchamber
    “60% of median income is around the state pension rate, ~£135/week.”

    What are you using for median income please? Source of data?

  • Dilettante Eye 20th Apr '20 - 12:23pm

    James

    Every UBI promoter has their own version, and their own basic monthly payment. You James would pay £585 /month, Joe Bourke would pay £700 to £725 per month and on another thread John Knox would give a very generous £2,500 per month.

    I’m with John Knox’s version, but maybe you three need a Zoom-conference to come to some concrete conclusions before you let the idea loose on the general public?

    What I do note is that NO promoter of UBI will ever quote a take home salary after it has cascaded through the chicane of various UBI (+)es and (-)es. Indeed avoidance of answering specific questions seems to be a major characteristic of evading scrutiny of how UBI works in the real world

    Even on this thread Daniel Walker is of the opinion that a salary + UBI is the figure you are paid per month, but doesn’t mention the actual take-home salary.

    So given you know how your UBI version works, and you would give £135 per week or £585 per month, please give some detail on these?

    Salary of £4,400 + £585 UBI. What is their take-home per month?

    Salary of £1,700 + £585 UBI. What is their take-home per month?

    Pension of £635 + £585 UBI. What is their monthly income?

    Does a child get a UBI, and at what age do they get full UBI?

  • £135/wk

    So we have a figure., which is aroung £7000pa. If that needs to be paid to 30 million people (total finger in the air figure!) that means this fund ultimatey needs to generate £210bn a year. If it is delivering a 10% return and all that is paid out in UBI that means the fund needs to reach a total of £2.1 trillion. Compare that to the sovereign wealth fund proposed by Vince which would get to £100m in 10 years and there is, to put it mildly, something of a gap.

    For comparison, the total UK expenditure budget for the current year (pre Corona virus) was a smidge short of £1 trillion.

    So I’ll ask the question again which is conspicuous by not being answered. How do you get there? You say tax more – well 5p extra income tax, assuming 10% growth and nothing taken out gets you about a quarter of the way there in 10 years. (And there would have to be questions about the effect on the economy of just taking £35bn a year totally out of the economy.

    This is utter fantasy politics.

  • Peter Martin 20th Apr '20 - 2:44pm

    @ James Belchamber,

    “…….with the freedom to not go pick at fatbergs for a living if they want their kids to eat.”

    We already have this freedom. Most kids eat. Most have parents that don’t have to work down sewers. But, nearly always, their parents do something, or want to do something, to make a contribution to society! We both know that someone has to do necessary work in unpleasant environments and when they do they should be properly rewarded. I don’t begrudge them a penny!

  • @ Peter Martin “I don’t begrudge them a penny!” ……. and neither do I Peter……. do by keeping wages down when they compete for local authority contracts.

    Great thing the privatised free market gig economy – for some folk.

  • Look above! I can see that I’m obviously a complete fat-head. But is there not one of you decent enough to spend just a few lines on dismissing me with a simple explanation of why my folly or my idiocy is just that? Or two of you or three in concert, if you’re not quite sure on your own?

    Let me try once more. We talk about the GDP, accepting, it seems, that there is such a thing, with a plausible total value over any given period, normally a year. Viewed from a different point of view, very much the same total can be found by a different estimating or counting route: A’s Income is one of B’s costs. Total Product equals Total Income. Put all the year’s Income/Product in a big barrel, and ladle out a bowlful to every man and woman in the land, leaving plenty still in the big barrel. And then empty the barrel by ladling out the probably very substantial residue, here and there, according to your lights or fears. Label the first bowlful UBI — and call it the National Income Dividend.

    Everyone gets an equal single bowlful, and then lots of people can have second helpings, or even thirds, depending on who’s wielding the ladle. And now start talking: not accounting, not economics, but politics.

    Somebody, please . . . . ? Two or three lines, surely?

  • “Why not a multi-decade project?”

    It’s virtually an unsellable propostition to go to the electorate and say we are going to impose a big tax rise now which will not have a real benefit for several decades

    “But note compounding will mean the 1st 25% of the fund takes the longest. Why not kick start the fund with a massive injection of capital raised while cost of debt is so low?”

    I think we may have maxed out the borrowing for a little while!

  • Peter Martin 21st Apr '20 - 7:55am

    Why does Norway have a “Sovereign Wealth Fund” but the UK does not? Who else has them? These are the top 7

    1) China 2) United Arab Emirates 3) Norway 4) Singapore 5) Saudi Arabia 6) Kuwait 7) Hong Kong

    What do we notice? Four countries which have lots of oil money. Three countries which are very export oriented and have much more money flowing in from trade than flowing out. The idea of a SWF is simple enough. Export capital to prevent the country’s exchange rate from rising too much.

    We have never been known to worry overmuch about the pound being too high. So why do we need one? Maybe we should have taken more care! We might have some industry left to take advantage of the current lowish exchange rate. When, that is, we all get back to work after our current problem!

    @ Hywel,

    “I think we may have maxed out the borrowing for a little while!”

    No we haven’t. Japan has a much larger debt level than we do. About 230% of GDP. It isn’t really Govt borrowing anyway. There is a demand to buy up Govt gilts in the same way there is a demand for banks to allow the rest of us to save in them. If some countries are determined to export their capital, in SWFs, then they have to find somewhere to park their money. That’s where we come in useful!

  • Peter Martin 21st Apr '20 - 8:09pm

    @ Roger Lake,

    I’m not sure what’s upsetting you. Your proposal to divi up the National Cake will sound to some like a more direct form of Socialism. James Belchamber prefers to do pretty much the same thing more indirectly. But his suggestion of Govt intervention, or investment, in the economy will sound like Nationalisation, and therefore Socialism, to some too! So you both may not be quite on the same page but you aren’t chapters apart.

    It’s fair enough to suggest, and even disagree on, ways that GDP, the total National income, or whatever you want to call it, should be divided up. Everyone seems to have some kind of opinion on that. But perhaps surprisingly no-one seems to have any opinion, other than to keep the status quo, on how the necessary tasks to create the GDP should be allocated. There’s just some naive idea that no-one will need to do very much because the robots will do it all for us. That is apart from the jobs than only Romanians and Polish workers are considered capable of performing.

  • Peter Martin 22nd Apr '20 - 8:29am

    @ Joe Burke,

    “The Centre of policy studies puts borrowing for this year at £300 billion…..”

    Or is that everyone else wants to save £300 billion in the UK?

    “As long as global growth prospects remain subdued bond yields will remain low.”

    They will remain low as long as the Govt wants them to remain low. The BoE will be instructed to buy more bonds to reduce the yield. They’ll be told to buy fewer or even sell some of the ones they own to increase yields.

    “capital will flow to where the returns are….”

    Such as? The problem for modern day capitalism is that returns are hard to find.

    ” Investment needs to be directed toward ensuring the UK economy …..”

    Directed by whom?.

  • @Peter Martin, above

    Thank you Peter, for your helpful comment. I didn’t — well, I don’t! — recognise that my suggestion is Socialism. And if it is, I do not recoil in horror, as would many of our LD correspondents, I think. One of the difficulties in negotiating a discussion in the Lib Dems is working out which are left wing, which right, and which wrong.

    That brings me to my concluding sentence, in the little appeal to which you have generously responded. I claimed to expose how simple matter it is, to see that the way to reduce the excessive imbalance between the disposable incomes of the poor and of the ‘rich’ is to take from the rich and give the money to the poor: Income Tax is an obvious way to do it, but not the only one. How much you do it determines the shape of the Economy under any regime. So in the end — and in the beginning –whether or not society ‘can afford the huge expense’ (as many LDV readers seem all too ready to assume) (that is, the initial bowlful for each and all) the size of any UBI is not a matter of Accounting or of Economics; it is a matter of Politics.

    And that, paradoxically, is why I am not frightened to sound like a Socialist, or a Conservative either. That is because of my third point — that the National Income Dividend will be a matter of two or three ‘ideologies’ competing to govern in order to control the arrangements for the NID after winning a general Election by respectable campaigning in a fair system: not FPTP but PR. The nation will choose.
    After the still running debacle of Brexit and now Covid-19 it will be eager for plenty of change, and we must get ready for it.

  • Peter Martin 22nd Apr '20 - 3:21pm

    @ Joe Burke,

    We know by the identities, in the sectoral balances, that the Government’s borrowing has to equal everyone else’s lending. This is often expressed as the Govt’s deficit is equal to everyone else’s surplus.

    You rightly made the point that I shouldn’t infer causation from these identities and I don’t believe I ever have. But you do it all the time! The CPS too in this instance.

    So how do you, and the CPS, know that it’s the borrowing that is causing the lending, rather than the other way around?

  • Peter Martin 22nd Apr '20 - 3:39pm

    @ JoeB,

    “At some point, a big fiscal stimulus would boost demand so much as to cause inflation to rise…..”

    Well yes. Who said it wouldn’t?

    “Given the inflation target, this would mean higher interest rates.”

    So you (and the author in your reference) are saying that you can warm up the economy by a fiscal expansion but if it overheats you cool it by a monetary contraction? Maybe I’m being simple minded, but why not just do the opposite of what is causing the problem in the first place?

    I suppose it makes a change from warming it up by a monetary expansion and then cooling it down with a fiscal contraction. It sounds stupid but that’s the economic policy which has led us, and the eurozone, to where we are now. ie a recessed/depressed economy, high levels of private debt and lots of complaints about govt economic austerity.

  • I think there is a needed for a real living ubi – but not a blanket ubi. Give £1000 to each person over the age of 18, but to top up benefits they would have received. Like the nhs its a safety net, not a means to simply become better off. Combine NI and income tax and simply lift the burden of taxation. We effectively pay 30% over 12k a year already. Gradually, scale back payments over £12k to encourage people to work as well and completely phase it out around 30k, depending on the increased level of income tax and tax brackets. We also need to fund it through new taxes but this would be fair more affordable than a blanket ubi.

  • Josh Hughes 24th May '20 - 5:34pm

    I found this subject whilst investigating UBI following watching a series of videos on various subjects. If anyone is interested, I’d recommend looking at Kurzgesagt on Youtube and looking into their Automation video as well as their Universal Basic Income video.

    Essentially, the first one describes a possible serious problem in the near future where we are able to instruct computers to do complex tasks as good as or better than humans can. The second video then of course goes into UBI which gives a good explanation of what it is, how it could operate etc.

    A lot of people have said something like “Oh we should encourage people to want to work [by threatening their livelihoods]” which I wholly disagree with. That puts the power of employment in the hands of the employer (“I know I can pay you 30% less than what I pay the other guy because I know your desperate, or easily coerced etc”).

    Giving everyone a UBI would put the power of employment into the hands of those who will actually be doing the work (“I don’t need the job to survive and I know you pay everyone else on my grade 25% more than what you’re offering me…no thanks I’ll keep looking”).

    There are also ways we could either restrict it and fund it to reduce the cost and raise funds for it. Such as not giving it to pensioners, which also has the effect in future if the pension age is raised then they claim UBI for that much longer, so its give and take.

    Another option is if automation is a real concern then why not introduce an automation or robot tax of some sort. Not enough to dissuade companies from innovating and developing these technologies of course, but it can at least help fund UBI meaning automation isn’t as scary for people.

    And then of course theres the passive returns, I’m not an economist, but as people have that guaranteed income, people could be willing to spend more, which in turn increases demand, which means more money from VAT and corporate tax.

    People may feel more confident and secure to open their own businesses also. If they have a guaranteed income then theres less risk to opening your own company. If it works out great they can hire more people generating more jobs + tax revenue. If it doesn’t they have the UBI to fall back on so its not really as big of a risk.

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