having calmed down after friday I’m back to agreeing with you.

One of the least stated but most important benefits to a minimum wage is that it tips the balance of insentives towards training.

Labour that is economically worth £3 per hour, but costs a firm £6 per hour, creates two insentives. One is to cut the wage (which the minimum wage doesn’t allow). The other is to raise the value of that labour.

That can be done most effectively through investment in training so as to diversify the role of the employee concerned.

“Not if you have a developed insurance market in which everyone is allowed to be a player (i.e. receives $10,000 per annum). I suppose in practice you may need to make insurance against life-threatening but treatable illness compulsory for all because people seem to occasionally make such poor choices (even with the money they have as an allowance).”

please try thinking before spouting this nonsense.

-

At present UK healthcare (the NHS) costs £2000 per adult in the UK – every year. And to make insurance compulsory surely means making it equal.

so take the £5000 payment everyone gets – take the £1000 council tax, the £2000 rent, and the £2000 insurance premium, and thats £0 to live on all year long. (Starvation ensues).
-

you might ask why premiums must be equal for everyone – good question – and here is the answer.

If such a scheme operated like normal insurance, then those at high risk would have to pay more. So a low risk poor person on £5000 a year might have to pay £1000 a year premiums. (which after council tax and rent leaves £1000 for a year’s food and heating).

A high risk person though, might face £4,000 a year preimums. Yet on a £5000 basic income that would be unnaffordable (council tax, rent and insurance all compulsory makes outgoings of £7000 from an income of £5000.)

as such that person can’t have healthcare unless additional support is provided for the poor.

-

and tada – the system again defeats itself because free or subsidised healthcare for the poor means reducing the marginal benefit of working.

Simply put: No, Social Credit, I think, misses the main point about the important link between value recognition and ownership, despite any valuable insights provided by the analysis.
Structural patterns of production and distribution identify only half of the relevant questions and answer only another half – it’s one of the reasons I am vehemently opposed to Green policy platforms, although it is easy to see how such an appeal can grow by hindering attempts to take a fully comprehensive perspective.

A good critique of modern capitalism encompasses the failure of centralising tendencies with consequent levels on inequality, but the problem remains how to provide an adequate and accurate measurement of value which maintains relevancy that can ONLY THEN be distributed fairly.

As I hoped to show with the example of the evolution of the pensions finance model, political pressures succumb to policy indiscipline in the name of power, with the result that capital value is destroyed by rebalancing the economic ownership in favour of active share-ownership at the expense of the stakeholding of more passive individuals.

Recent budget commentaries have underlined the forgetfulness inherent in this by trying to (properly!) redesignate National Insurance contributions as taxation, but then again, since Government finally abdicated Treasury responsibility for deepening universal capital holding by encouraging privatisation (here: take-up of private pensions) one must ask if the original basis for such a mechanism was still in any way truly meaningful (@Nick – National Insurance seems to have been designated for exactly this purpose: not just to allow entry, but to compel it).

In some senses I would advocate a reformed (some would say fully-implemented) market system of liberal capitalism that partially gleans from social credit on the grounds that exchange of goods and services is benefitial provided transactions are open, transparent and accountable, but this depends on the ensuring the accessability and universality of the measurement involved.

For this reason a dual approach is neccessary and I can’t escape drawing the conclusion that the levels of both individual knowledge as well as education reflect the motives and incentives of individuals and institutions involved.

One of the greatest reasons families on the lowest rung of the social ladder become trapped by the ills associated with despondant poverty is the failure of children to achieve their potential in schools.
A history of academic and educational underachievement is often accompanied by the breakdown of school attendance and in-class concentration, as higher levels of truancy are recorded and lower qualifications are attained: for many kids school is work and the classroom is a prison, while for parents it can often be viewed as an extended version of daycare or babysitting.

At the same time the degradation of skills is matched by the grade-inflation pressures attendant in the establishment of the educational marketplace as exemplified by league-tables.
Without a base standard set by the state inequality is exaggerated – some prosper, others fall through the net. In effect this creates the perception of a glass ceiling for those at the bottom, but when properly done a glass floor should raise all (@M4E, this is where we got our wires crossed about the minimum wage – the benefit of a minimum wage is the imposition of a glass floor rather than any one-off provision of a money escalator for those in low-pay jobs).
Employment rights are one form of compensation for previous failiures to identify the potential of an individual and their ability to reach it, so it is almost like closing the barn door after the horse has bolted.

The ambition of a sustainable employment sector should be to provide real jobs through real occupational opportunity, not through insecure entry-level temporary positions scavenging on the unwanted left-overs of an elitist heirarchy with little or no chance to progress.

so a market system secures economic best value ensuring a costly lifesaving operation is only available to those who are able to generate sufficient economic resource to tip the balance.

hence the poor die”

Not if you have a developed insurance market in which everyone is allowed to be a player (i.e. receives $10,000 per annum). I suppose in practice you may need to make insurance against life-threatening but treatable illness compulsory for all because people seem to occasionally make such poor choices (even with the money they have as an allowance).

yrs Sincerely
Roger.

I would say, though, that this is more a question of finding the balance of correct distribution of ownership, rather than artificially redistributing current holdings of property.
Also, the aborted Baby Bonds scheme did indicate one potential direction for investigation if you are really interested, although the half-hearted mechanisms and flawed formulae that were designed for their implementation highlighted the limitations of any scheme that isn’t radical enough, which is probably why the policiy didn’t pass the full period of gestation.

For a Liberal, I think the full implications of any compulsory universal scheme could be threatening as it comes perilously close to an ID database. Although the necessary devolution of decisions to a personal level would provide a system of checks and balances to centralised control.

If you think of HMRC as more of an holding bank than a bailiff (and BoE as the investment side), once you have set the minimum bar of universality, all that is left is to answer where in society the unrecognised value lies and by what formula to monetise that value so as to enable access to it for the wider populace.

The point about healthcare is well taken, and I fully agree that composite health, wealth and well-being cannot be separated from education. In fact any ‘knowledge economy’ must stem from recognising the true value of all knowledge.

In the area of health, I would suggest that it is the lack of responsiveness to the true health demands of society where the efficiency loss stems from. Again, this problem is resolved by working out a system of funding that does not depend on centralised decision making, so any universal endowment trust (which cannot be subverted for political ends by government) devolved to individual level provides the clearest relationship between institutional provision and end-user need (or if you prefer, supply and demand).

The argument about implementation of the market to force the changes is flawed by the failure to fully implement open and accountable relationships on both sides of the customer experience. This manipulation of regulatory requirements favours existing players and thus prevents any market from functioning effectively, thus any potential efficiency gains are prevented.
The true costs of health-care are obscured by the opacity of the decision-making process, as consultants, health-care managers and insurance institutions each seek to balance their own competing needs – with a result that any service is recieved with forced gratitude, rather than with the assured expectancy of the highest standard and welcome warm thanks in return.

your link suggests scrapping medicaid – the UK equivelent to that action would be scrapping the NHS. And doing so means leaving healthcare to the market.

And that’s where letting the poor die comes in.

You see, you mistake economics for communism.

Economics does not secure “equal entitlement” to anything as you optimistically suggest. It secures maximum value from scarce resources. (yes I did this at uni – sorry – it is dull)

Take red sports cars. Every man woman and child in the economy does not have one. That reflects that many choose not to own because they prefer a red Mini, or a green sports car, or because they don’t have the economic resources to exchange for one and so must prioritise other purchases (like a train ticket or a smart car).

and so it is with healthcare.

hence those without the economic resources to buy their life can’t have their life. Granted the alternative isn’t a smart car or a train ticket. It is death. But economics can’t distinguish between death and a smart car.

so a market system secures economic best value ensuring a costly lifesaving operation is only available to those who are able to generate sufficient economic resource to tip the balance.

hence the poor die

-

also your notion of the NHS is seemingly based on a complete misunderstanding of socialogy.

In particular you seem to attribute lower life expectancies for the relatively poor to a lack of access to healthcare. This is at most only a part of the cause, and in statistical relevance not a significant cause at all.

In Germany, Japan, Canada, the UK, France, etc the poor die younger than the rich. This is connected to housing conditions, diet, risky behaviours (drink and smoking in particular) and more dangerous or health damaging jobs. It is also a result of diminished education and thus less access to health information.

in the USA there is an additional cause resulting from using the market to determing healthcare.

That cause is that when the poor get knowingly sick they are turned away from treatment and left to die if they have no health cover or money. This applies to children in particular, adding to much higher infant mortality rates in the USA compared to nations of comparable wealth.

Uhhh… sorry, where exactly do they suggest letting the poor die? And I dunno if you have noticed, but poor people die when they get sick right now in the UK. They just die while waiting for treatment or after having been refused treatment that could have prolonged their life. A lot of those in work tend to use a mix of private health and the NHS at the moment, so as not to spend too much time off work. So that privatised tax is already in operation.

Since we don’t yet have in existence (or even in theory) a perfect system where health care costs are controlled and the poor get equal access to treatment, your options are:

- a disgustingly fake left-wing system that gives official entitlements to everyone while rationing availability according to a politically directed distribution of resources.

- a “disgusting” right-wing position that would give an equal entitlement to everyone to pursue their own health care needs. It doesn’t offer the guaranteed health care of a socialised system, but since those guarantees are never actually backed up, it might turn out to be preferable.

I am not left wing, I am a liberal. But I happen to think that the left point out many of the problems with society more successfully than those on the right. I feel it is up to those on the right to fit those problems that the left describes into solutions that are compatible with individual liberty.

your link to an american view of it suggests letting the poor die when they git sick – so as to make this affordable. That’s disgusting. Did you even read the interview you linked to?

so here we go again…

If we take your american suggestion and scrap the NHS (9% of GDP) we might need a smaller tax hike of 5-6% of GDP to pay for it.

however

We’d all then have to start paying for healthcare. That is effectively a privatised tax on those in work – and so the impact on business chosing to locate abroad, and staff moving abroad for work, remains unchanged.

and what of that pensioner on £5000 a year?

along with £2000 on rent and £1000 on council tax – he or she will now have to pay for his or her heart attacks, strokes, insulin, cancer treatment, flu jabs, etc. Along with food, electricity, water and clothes.

unless of course you imagine any insurance scheme would provide comprehensive cover to an old person or a poor person for a figure that didn’t take up all of their last £2000 a year. (they certainly don’t in the USA.)

and since we can’t offer any social provision without yet more tax hikes and completely undermining the point of the scheme – we must therefore let anyone out of work who gets cancer or has a heart attack die.

brilliant – what a wonderful left wing policy.

The following link shows our present welfare bill totals a bit under 10% of the total economy. http://www.dwp.gov.uk/asd/asd1/abstract/Abstract2006.pdf . (it peaked at 13% during tough times) ”

You are still not considering what the effect of the new incentive structure would be. Properly implemented, it would allow the economy itself to grow, meaning that the proportion of taxation could be the same or lower than it is now. Anyway, I haven’t done the calculations myself and I am not an expert on making estimates like this. My support for the idea of a basic income is more based on Charles Murray’s work in America, In Our Hands: http://www.aei.org/publications/filter.all,pubID.24127/pub_detail.asp

His theory relies on American figures and aggregating ALL welfare spending into one large allowing for every individual. I am not sure if anyone has done a similar calculation for UK spending so I cannot answer with figures. Nevertheless, I hope someone does do the analysis at some point and we’ll be able to see whether a single basic allowance would be preferable to a growing and encroaching welfare state.

If it is not taxation, it can only be debt or fiat, surely?

overcoming vested interests, egos, other difficulties and politics doesn’t make one’s policy right in itself.

As Bentham must have told Mill, history has tested those vested interests and other difficulties and found they have value. Hence they remain.

While I don’t agree that such practise could be argued as either more efficient or necessarily so, it is nevertheless enlightening to entertain the logic of it. As such it is just a question of formulae, financial mechanisms and a clear-headed, determined government with the right balance to see through any transition (though it speaks volumes about the vested interests, egos, other difficulties and politics that the closest this country came to such a government was the one that introduced the pensions system so long ago).

while what you say is true – I don’t understand how any of it means that the basic income wouldn’t be paid for by taxation.

where else would the money come from? We can’t just conjour up £250billio a year.

When pensions were introduced more than a lifetime ago the additional taxation used to pay for this was considered an investment in the future. As the generations passed and economic fortunes fluctuated, this form of national income started to be viewed as just that, unhypothecated income. When successive governments overreached themselves the contributions began to be used to pay for the outgoings, secure in the knowledge that the shortfall would be made up over the economic cycle. This never came to fruition as the latest generation capitalised on the future income base. The latest crisis was solved by privatising large chunks of it, effectively making us pay twice for something that has become meaningless, while thankfully taking it out of political control.

So what was designed as workers paying for their own retirement became workers contributing to the retirement of their parents and has since become paying the interest on the debt financing secured through this system (which went to pay for uneconomic subsidies and the massively inefficient expansion of the welfare state from the 60′s onwards), while we are asked to make voluntary contributions to private pensions because we are told this is now unaffordable!

The argument of the demographic transition and our aging population is a complete misnomer, as this would remain irrelevant had the original system been adhered to, but instead our grandparents generation decided to squander their wealth and subsequently our parents decided to squander the financial security of their children – us.

Yes, our parents never had it so good, because their stupidity ensured we wouldn’t.

here is some 4d thinking for you. (based on estimates obviously).

The following link shows our present welfare bill totals a bit under 10% of the total economy. http://www.dwp.gov.uk/asd/asd1/abstract/Abstract2006.pdf . (it peaked at 13% during tough times)

a basic income payment would therefore require us to undertake a tax rise worth around 15 percent of the economy (to pay for the quarter of the economy it costs)

-

So – what would Britain with a national tax take of 55% instead of the current 40% look like?

It would be wrong to imagine that high tax economies always suffer low growth and low employment due to competitivity. However, those that don’t (Sweden for example) tend to avoid that trap by investing their heavy tax take in education and infrastructure, which benefits their economy.

The UK can’t do that, having allocated that extra tax take to hand outs to rich and poor alike. (Though to the wealthy £5000 doesn’t amount to much).

So we would have the same skills and infrastructure as at present, but with far higher tax.

that is likely to drive companies and skilled workers out of the country. Which in turn makes the tax take all the harder to collect as it must then be collected from a relatively smaller and economy with poorer people.

This spiral could be partly halted by scrapping the national minimum wage and competing for manufacturing jobs in the global economy. (note we couldn’t compete for service sector jobs as the well educated are likely to leave the country in large numbers if their incomes fall signifcantly. Even falling costs of living here not counter that as large numbers can work abroad and save much higher incomes for a wealthy retirement back home, as many immigrants in the UK do at present.)

So – manufacturing jobs – at present china employs unskilled staff at around a 20th of the wage of the UK.

So cutting the national minimum wage might see wages fall to Chinese levels of around 30p an hour. (The marginal value of employment therefore cut drastically again), not least as that income would likely have to be taxed.

But doing that would put wages on parity with china, not all costs. indeed china’s labour regulations and safety regulations are far cheaper to meet than ours, so our wages would have to fall further, or our conditions would have to become far less safe.

–

I hope that helps explain the nature of economic collapse the policy would trigger.

water – electricity – gas – food – clothes.”

Do-able if you scrapped subsidies and tariffs on food, so lowering the price to its real value, and abolished the minimum wage so that basic goods and services could become cheaper. The economy itself would benefit from the fact that there would be far more people employed (no incentive not to work), lowering the real terms cost of goods generally. The problem with those sort of calculations is that they don’t think 4th dimensionally. Of course, moving from our current model to that theoretical model would be very painful unless done in tiny stages. But that doesn’t mean it wouldn’t work given the right order of reforms.

I understand how easy it is to be conned into supporting this. I was until I worked out the maths.

–

£5,000 a year basic income + 50million adults = £250billion annual cost

that’s a between a fifth and a quarter of entire UK GDP
that’s over half of all government spending in the UK.

And what does that £5000 a year buy for the poorest people…

council tax – £1000 (for simplicity sake)
rent – £2000 (£38 a week)

That would leave around £2000 a year or £40 a week spending money for…

water – electricity – gas – food – clothes.

-

We could then reintroduce additional means tested benefits. But that adds to the cost and completely undermines the point, which was supposed to be to improve the marginal benefits of work.

-

as a logical argument it is a brilliant proposal. But as a practical policy people would die and the economy would collapse under the weight of it.

Citizen’s Basic Income is a fantastic idea, however no mechanism has, as yet, been suggested by which would secure it’s financial sustainablility. CBI is also politically explosive for the radical changes that would be required to enact it and any transition to a model of economy based upon such a minimum standard (as opposed to the shoddy excuse called the minimum wage) would necessarily ruffle feathers across every sector of society – so who would champion it?

From what I can see, only aspirant artists and athletes, inventors, criminals, health patients, students, hermits and other non-conformists or social rejects would ever see any importance in being idle: Government has so entwined its interests with business (ie busy-ness) that it has become dogma for anything else or less (ie laziness) to become the concern of the busy-bodies for their perception of being a problem and out-of-control. So it is highly perverse that all those groups named above, among others, are and will remain the objects of intractable governmental failure.

So that yes, you only get £100 per week, but anything you earn above that would be tax free, incentivising part time work or small business start ups, etc.

It would be affordable by a number of measures, including a substantially reformed tax system, loss of administrative costs and, amongst other things, Land Value Taxation. Chris and others persuaded me of the case several years back, and although exact costings willd epend on economy at the time, the basic principle is reasonably sound.

Metatone: The liberals are caught up in a model of an economy which relies on an underclass of temp workers

Really? I don’t know many liberals keen on having an underclass of any kind—I myself am currently temping, and while I accept it it’s not something I’m particularly happy with. If you said “some liberals” then you’d be correct, but not all liberals want a permanent underclass, most of us recognise that sort of thing is horribly illiberal.

stumbling and mumbling makes a good case for a bad policy.

sure a fixed state income paid regardless of other income for every man and woman in the country might seem great, but here is an illustration of the policy.

50million adults – and a living income (barely one in this instance) of £5000 would cost…
…£250billlion (granted we could end the state pension under such a scheme).

For that the poorest people, including pensioners, would have to survive on £5000 or less than £100 per week.

And that’s not £100 per week in a world with housing benefit and council tax benefit – so that £100 would still have to pay rent. council tax, food, heating, clothing, etc.

is that practical? and could those of us working afford it even if it is?