More Thinking About a Guaranteed Annual Income, Lower Annual Returns

Marlene Dumas (2011) from Amy Winehouse (‘Amy-Blue’), National Portrait Gallery

What I’m listening to. 

Richard Strauss.- Concerto for oboe Amd Small Orchestra in D major

The debate over a guaranteed annual income is nicely analyzed here.

Quick look.

Financial Times Magazine - Could an income for all provide the ultimate safety net?

‘Though the idea of a basic income is far from mainstream, it has had astonishingly broad support’.

Bigger look.

RSA - In Support of a Universal Basic Income 

A couple of years ago, I was told of two young mothers who were studying for a qualification in nursing care. Towards the end of their studies a local Job Centre Plus insisted that they make themselves available for work or face sanction. They left their course and failed to qualify. They lost out and their time had been wasted. They were locked in the same oscillation between benefits and poor quality work. And society lost too - we need nursing care workers.

One of the issues that so many people get caught up on is whether a guaranteed annual income will encourage people to ‘stop working’. We wrote about this in 2010 (The Canadian Citizenship Wage) , the relevant sentences are below, but this is always the risk of a public good that it will be taken advantage of whether it is education, health, the courts, parks or transit. The argument of course is that ‘on the whole’ the benefit from a public good like a guaranteed annual income more than outweighs the risk of moral hazard. 

Quote: “The standard objection to this type of programme is that it provides a disincentive to work. There is truth in this. There will always be a subset of people that do not want to work and are prepared to live their lives at the poverty line. Yet we know that these citizens can among other things be a social nuisance, tend to spend more time in jail, and develop chronic health problems that ultimately are very expensive to the taxpayer without providing the means or motivation to improving their lives. The conversation and moral imperative with a squeegee kid is different when they have an annual income from the state.

It has never made much sense to me to refuse citizens the means of the most primitive life on the premise that they should take of themselves but then extend access to the most expensive health treatments for problems bred by poverty that were preventable in the first place.

It may also be true that the Canadian Citizenship Wage may encourage people that are working today to leave the workforce and live at the poverty line. There will always be a subset of citizens like this mostly ill of mind, lazy or incompetent. Not to mention struggling writers and artists. But by focusing on this subset of people the unintended consequence is to make it difficult for people who do want to improve their lives to do so. Poverty is not always a choice.

There are four classes of people that live in poverty: first, people that can not work for physical often mental reasons; second, people that want to work do work but are still poor; third, people that want to work but are unemployed; and fourth, people that can work but do not want to. Currently, our social income policies are so complicated that they deal ineffectively with all four classes and ultimately compound the costs to our society in terms of economic and social health in part because we are so caught up in the moral hazard of letting those that do not want to work off the hook but make it difficult for the other three classes to hope for a better life.”

Hard markets.

Economist - Buttonwood: The great switchover

The mood of the markets has changed.

 

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Twin Virtues: Inequality of Outcomes & Equality of Opportunity©

Twin Virtues

Ultimately, the most successful societies find the balance between the twin virtues of inequality of outcomes and equality of opportunity.

The new politics must marry the twin virtues of unequal outcomes and equality of opportunity.

When too few get too much everybody loses.

Feminism is about women living their lives on their own terms, marshalling the resources of the society to make that possible, and men embracing this as vital to a successful society and their own liberation.

Can it be that striving for equality of opportunity however imperfect the process not only benefits the individual but also creates benefits for the society that are unintended but wonderful?

Economics must be a 'moral enterprise' as much as politics claims to be. Economic outcomes need to be framed in terms of right and wrong not just efficiency if only because these often align in surprising ways that are good for society and the economy.

My vision of Canada is that any Canadian child from a family of limited circumstance can expect to have a chance at lifetime of unlimited opportunities.

Free trade is a wonderful thing. Time and time again economists have proven that free trade creates enormous wealth for each country 'on the whole'. Historians have shown that free trade is usually associated with rising political, social and cultural liberty. The perennial problem is that free trade always creates tremendous disruption for thousands even millions of individuals often concentrated in one geography, and where the state is idle, not investing in best in class instruments of social justice, free trade can be a permanent ticket out of the middle class, down, not up.

Tax policy should be founded on the principle of generating steady tax revenues sufficient to maximise environmentally sustainable economic growth in order to fund fair government.

Public policy should be designed to decrease inequality before the law and increase equality of opportunity.

Capitalism is not the problem; the problem is what we do with capitalism.

Content is always more difficult to argue than conspiracy.

Let the state regulate and the market operate (most things).

Welfare strategies are best designed as a hand up, not as a hand out.

Political debate should not be fact free fighting.

Explanation lasts longer than eloquence.

Always favour empowerment over dependency.

The most enduring public figures are embraced for the causes they fought for and not the concept of themselves they hoped others would remember them by.

Find your voice and don't be the echo of somebody else.

It is possible to operate on two different levels: the practical, cautious and conservative; and the realm of ideas, open, free, and radical.