One of the recurring ideas that crops up in alternative economics circles is the citizen’s income. In a nutshell, it’s a universal and unconditional payment made to every adult in the country, every month. This provides everyone with a ‘guaranteed minimum income’, which is an alternative name for it.
We have it in a form in the UK already, through child benefit payments. A full scale citizens income would include adults too, with different rates for different stages of life. Everyone would receive it, and it would replace child benefit, state pensions, unemployment benefits and a host of other tax credits.
Reactions to this idea generally divide in two. The first group is ‘brilliant – free money from the government’. The second comes from those who think about it a moment longer and realise that it would be funded through taxes. Then they ask why you’d want to give benefits to rich people as well as poor people.
A fair question, but there is some sensible thinking behind the idea of the citizens income that makes it more than the national pocket-money scheme it appears at first glance. It’s also one of those ideas that has been advocated by politicians and economists from right across the spectrum. It’s been a recurring policy in the Green Party, but free-marketer Milton Friedman was a fan too. Martin Luther King called for it. So did Napoleon. It was discussed by the Labour Party in Britain in the 50s, and by the Republican Party in the US in the 60s. Bertrand Russell wrote that it allowed society to enjoy the best of anarchism and socialism at the same time, as part of a largely forgotten libertarian socialism movement. There aren’t many ideas that can cross these sorts of ideological boundaries so freely, and when you find one it’s well worth investigating it a little further.
A fair benefits system
The first reason to take a citizens income seriously is that in a society that runs social security programmes of any kind, you will have net contributors and net takers. Some people work hard all their lives, save for their retirement and maybe even have private healthcare insurance. Where social programmes are fairly generous, there’s a risk that such people end up as net losers in financial terms, paying for the sections of society that can’t or won’t work.
The usual political response is to this problem is to cut benefits to ‘make work pay’, so that ‘spongers’ can’t live off the hard work of others. That’s legitimate, and a system that pays people not to work is obviously self-defeating, but it only deals with half the problem. If you cut benefits right down, you punish those who are legitimately out of work, and still end up with a large section of society that are net contributors. You can never create a fair system. All you can do is shift the burden back and forth between sectors of society, usually on the basis of who is most likely to vote for you.
The citizens’ income fixes that by securing a share for everyone. There would be no unemployment benefits, because everyone would get an equal cut of our shared wealth. The sum wouldn’t be enough to live on in any great comfort, so it wouldn’t encourage idleness, but it would be enough to provide a safety net for hard times. Everyone would get it regardless, so there would be no winners and losers in the benefits system. The endless arguing over benefits scroungers and the ‘hard-working’ middle would be solved at a stroke – everyone gets treated equally.
Rewarding unpaid work
Another good reason for paying a citizen’s income is the vast amount of unpaid work that goes on in the economy. As things currently stand, you only get paid if you have a formal job. But just because you aren’t in a job doesn’t mean you aren’t working. Some of the most important work in the country is currently going unpaid.
Consider someone who chooses to drop out of work to care for an elderly parent. There is a cost to that care, and if the son or daughter wasn’t doing that care for free, it would have to be picked up by the state. Instead, that person has opted to take those costs in the form of lost wages.
The same is true of parenting. If you put your children into childcare and go to work, this creates two jobs – one of you and one for the carer. This is good for GDP, which counts all economic activity as positive, but it’s not good for the child or for the parent. This is rather perverse. Raising children is valued if it is done by a stranger, but is technically ‘worthless’ if parents do it themselves. All of society benefits when children are brought up well, and society suffers when children are brought up badly, so it is in our interests to value parenting.
Carers, parents and volunteers provide services to society that would be worth billions, but that work goes unrewarded. A citizen’s income would not be ‘paying’ people to do these things, since everybody else would get it too, but it would mean that those who choose to do important but unpaid work aren’t penalised financially for making that decision. Since a disproportionate amount of unpaid work is done by women, this would also be good for social equality.
A dividend in the national wealth
The forms of wealth that are most familiar to us are personal, accumulated through personal effort for the benefit of individuals. There are other kinds of wealth too though, things that are shared in common. That includes the atmosphere, the oceans, airwaves and airspace, and plenty of other things that belong to nobody and therefore to everybody.
As things currently stand, businesses get to use most of these shared resources without paying for them. Society picks up the cost collectively, so a public resource gets run down for private gain.
Consider a factory that pollutes the air. There are costs (externalities) that the factory owner doesn’t pay, from environmental degradation, to asthma and other health problems, and perhaps even a changing climate. Society pays those costs instead, even though the resource that the factory has used – the atmosphere its chimneys discharge into – belongs to all of us.
Environmental taxes already catch some of these costs, but the revenue usually just goes into the central pot of government spending, so we’re not really compensated as individuals. The same goes for our natural resource wealth. Revenue from Britain’s North Sea oil just goes into government spending, but other oil-rich parts of the world see it as a natural wealth that should be shared more equally – see Alaska or Norway.
A citizen’s income recognises that we’re all shareholders in our natural capital. We all suffer when it is abused, so why shouldn’t we all benefit when it is used well? One of the key ways to fund the citizen’s income is to levy a price on the commons. Businesses that use shared resources pay for the privilege, and those of us that are stakeholders in those resources are compensated. In that sense, the citizen’s income is not a universal benefit, but a dividend in our shared national wealth.
Smaller government and personal freedom
One of the interesting things about the citizens income is that it has been championed by both sides of the political divide. It is good for society and for the poor, but it’s also good for personal freedom and reduces the size of government.
Because it would be unconditional and automatic, you could sweep away whole swathes of bureaucracy that currently assesses, administers and polices the benefits system. You’d still need a few means-tested benefits for certain cases, such as disability, but many more general benefits and tax credits would be rolled up together. Many government services focused on poverty would be rendered obsolete, along with state pensions. Benefits fraud would be dramatically reduced. There are lots of potential efficiency gains from a citizens income, and hence a smaller state apparatus.
The citizens income is also good for personal freedom because it would give everybody an equal platform to build from. It would give people a safety net for those who wanted to retrain or start their own businesses. And of course you are receiving a dividend from the government in cash, for you to spend however you want. It would be entirely up to you whether you saved it, spent it or gave it away.
Funding a citizens income
So a citizens income sounds great in theory, but can we afford it, especially in times of austerity? I’ve already mentioned the savings from simplifying the benefits system, and state pensions, child benefits and unemployment benefits all offset the cost. I’ve also mentioned environmental and resource levies. The other big funding option goes right back to the earliest proponents of the idea.
The roots of the citizens income go back to Thomas More’s Utopia, surface again in the French Revolution, and are perhaps best articulated by the revolutionary Thomas Paine. “The earth in its natural uncultivated state,” he wrote, is “the common property of the human race.” Private ownership and use of land deprives others of their “natural inheritance”, and so they should be compensated. In other words, the citizens income is best paired with our old friend the Land Value Tax.
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To me, the citizens income is one of those ideas that we’ll keep circling around and eventually settle on, although perhaps not any time soon. We’ve come quite close in the past. The Nixon administration got so far as to pass a guaranteed minimum income through Congress under the name Family Assistance Programme, but it was rejected by the Senate in 1972. There are several smaller-scale measures in place, including Child Benefit and some of the other universal benefits brought in by Britain’s Labour government.
There’s only one place that runs a “genuine” citizens income, according to the international network BIEN, which campaigns on these issues. That’s the aforementioned Alaska. It won’t be the last, but it is now more likely to emerge in the global south than in the social democracies of Europe. Brazil has passed a law mandating a basic guaranteed income, although implementing it has been slow. There’s been a big debate about it in South Africa, and Namibia has run a pilot project. India is halfway through a trial at the moment in two different regions, to measure its effect on poverty.
The citizens income has been talked to death countless times in Western politics, but it could still have its moment.
- There are dozens of books now on the Basic Income. Here are ten.
The Earthbound Report 
Reblogged this on and commented:
Some interesting comments in this blog article concerning the concept of the citizen’s income. Any views on whether it is conceptually sound, and practically viable?
You know, people could actually earn more interest on the money if the government didn’t take it from them, hold it, and then give it back. This and the effects of deadwight loss are what make tax refunds (which this essentially seems to be to me) a “ripoff” in the first place. I’ve made my case more thoroughly here: http://dynamopolitics.com/2012/04/07/your-tax-refund-is-a-rip-off/
Also it’s ironic that Alaska seems to be your shining example. It can only afford to pay citizens because of it’s vast oil reserves. Judging by the rest of your site, I’d think you’d oppose that funding source. Take away the oil and the minimum income is gone.
Considering Alaska is the only example, I don’t have a whole lot of choice in the matter. And actually, I fully support Alaska paying its citizens a share of the oil revenues. If you’ve got natural resources, regardless of what they are, you should be paying your citizens a dividend from their use.
I’m curious to get your opinion. Why should the citizens be paid by the government? Private industry owned by citizens and private land owned by citizens is put to work using the labor of citizens to create wealth. The government just largely exists as a regulator – even the recruitment of labor could be privatized without government intervention in the feild.
It’s not the government paying citizens a salary, so it doesn’t in any way undermine private industry. The citizen’s income is a minimum basic income that provides a safety net, but it isn’t enough to stop people working.
Why should the government even pay a minimum? For all the reasons in the post – to pay our a dividend on natural resources, to compensate people for unpaid work like raising children, and as a fairer form of social security.
If you’re advocating replacing safety net programs like social security or TANF with a minimum income then I think that merits a closer look. Adding it on in addition to them would just excaberate the problems we’re already suffering with them; that is, we can’t pay for them.
Sure, tax credits are often a rip-off. This isn’t a tax credit, it’s a dividend from your national wealth and it’s drawn from a whole bunch of sources, taxation being just one of them.
Maybe I misunderstood you. People are already paid a dividend on the national wealth – wages. Anything outside of that must be aggregated by the government (taxation) and then redistrubited (refunded), so it seems to me like it’s the same phenonmenon with a different name.
Wages aren’t a dividend on the national wealth, they’re a reward for work. What I’m talking about here is things that are owned in common – such as airspace, magnetic frequencies, fish stocks, and natural resources such as oil, metals or gas.
People can own the land where that oil or metal ore is found, but they didn’t create it. It’s just there, an inheritance from a distant past, and it belongs to all of us. Companies can buy the rights to exploit those resources, but everyone should be compensated in some way when those resources are used.
That compensation is gathered through taxes or licenses, and then distributed on a completely equal basis to all citizens.
That’s very, very different from the kind of taxation most of us are familiar with, which is the government taking a slice of income and redistributing it. I actually think that form of taxation should be abolished, or certainly reduced to as little as possible.
Well I’m with you on one thing – I’m not a big fan of the income tax. But isn’t income just a representation of that “natural wealth” you mention? After all, exploitation of resources is what leads to the creation of wealth in the first place – those ores underground are work $0 until someone digs them up.
I have a great example for you from my personal life that where wish Citizen’s Income existed… I am a teacher. I mostly am a full-time volunteer working in the educational, youth and development sector with my favourite not-for-profits. Currently I have to substitute some of my time for paid work that doesn’t really contribute more to the national (or global) wealth in order to sustain my volunteering education work. I am not looking for a hand-out but to be paid a subsistant amount for my work and the benefits of it – just like I do when I am a teacher in a classroom. I can get unemployment benefits but this is against the ethics and ethos of its purpose as I could be a fully paid employee. Therefore I LOVE the idea of Citizen’s Income and I know many others in a similar situation who want to do meaningful important national wealth contributing but it is a job that is determined not paid or financially supported – thank you Jeremy for this post and where to push from here?
Absolutely, it’s quite possible to give your entire working life to really important work and never see a penny for it. The citizens income would free up more people to do voluntary work and compensate those that already do it.
I’m in the same boat as you, I have a three day a week day job to pay the bills while I get on with all the other projects.
Where to push from here? Check out Basic Income Guarantee Australia (BIGA) http://www.basicincome.qut.edu.au/
As a disabled person I have been excited by this idea since I first read a book called ‘To Have or To Be’ by Erich Fromm back in the 1970s. At the end of the book he asked people to imagine such an income and then asked them what they would then choose to do with their life. I think he also said that every person would also be entitled to a living space, including children. It felt like one of the most liberating ideas I had come across – I could feel the weight fall from my shoulders. Many disabled people cannot ‘compete’ with non-disabled people in the job market, having to work full-time, commute to work etc, and so end up doing nothing meaningful with their lives although bursting with talents and motivation. And likewise, many people with so-called ‘learning difficulties’ could work in a pair, or group where skills such as reading and writiing were shared, but cannot compete at all as an individual employee.
I have a question though, given the exorbitant costs of housing at the moment, how would we deal with this? Would we still have a form of Housing Allowance?
The working person would hate this but the non-workers would love it.
Why would working people hate this, exactly?
By the non-worker do you mean the workers who work in a job that society deems as not pay worthy – i.e. volunteering?
Jeremy,
This is a great post, wonderfully laid out. I am a huge proponent of a citizen’s income coupled with pollution and resource extraction taxation and land value taxes. I think you’re right, that with those options we can essentially eliminate income tax (at least on a federal level in the US) and either eliminate or significantly reduce a lot of the other social nets like social security, welfare, etc…
Cheers,
Joshua
Yes, roll in land taxes and pollution and resource taxes, along with consumption taxes on luxury or energy-intensive goods and services, and you can fund this without income tax. That’s got to be the goal.
Hi Jeremy – Andy Kingston-Smith at Redcliffe College here. I wondered whether you would be willing to write an article for our college journal, encounters, around the theme of water and a Christian response (we can discuss tighter parameters on the content subsequently). Unfortunately, I don’t seem to have your email address, so could I trouble you to contact me at akingstonsmith@redcliffe.org, and then I can fill you in on this. I would need something by around 3rd week of September. Thanks, Andy
making poverty profitable and keeping wealth stealth…justsum wordz i herd>
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Reblogged this on 0olong Messes About On WordPress.com and commented:
I keep referring back to this post, so I thought I might as well re-blog it…
Today, I went to the beachfront with my kids. I found a sea shell and gave it to my 4 year old daughter and
said “You can hear the ocean if you put this to your ear.” She placed the shell to her ear and screamed.
There was a hermit crab inside and it pinched her ear.
She never wants to go back! LoL I know this is entirely off
topic but I had to tell someone!
I can clearly see the economic benefits of a citizens income, but, my conscience hurts at the thought of getting a cut from polluting the earth, call it citizens income, fair-play, compensation whatever. I wisn you could convince me that I’m seeing it wrongly, but I doubt you can? The only point I can make for myself is that we already ‘benefit’ from the earth’s pollution and still do not acknowledge that the trade-off is not worth a grain of sand.
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I’m afraid it’s already too late for taking a cut of the earth’s pollution! If you have a bank account or a pension, you’re likely benefiting from fossil fuel and heavy industry investments. If you’re a British citizen, you’re benefiting from a society founded on coal and colonialism. If you pay taxes, some of that is spent funding fossil fuels. If we drive, eat, have electricity or a flushing toilet, or let the council take our rubbish away, then pollution is happening somewhere on our behalf. If nothing else, we emit CO2 just breathing. So we’re all implicated, to one degree or another. A citizen’s income certainly can’t make it any worse!
I do think you’re taking the citizen’s income the wrong way though. Not least because it’s quite possible to use the earth’s systems without abusing them – like we humans breathing in and out. Paying to use our common resources is not the same thing as paying to pollute, and it would be wrong to think of the citizen’s income as some kind of blood money.
There’s also more to the citizen’s income that our common natural resources. It’s about the wealth that we create together. You’d have paid into it through your taxes, so your share back again is rightfully yours. No need for guilt about it.
Should it ever happen and you still don’t like it, you can always refuse it or give your share away. I know people who don’t think they need winter fuel payments but get them anyway, so they just give them to charity.
Thank-you for your efforts Jeremy. As I said, I didn’t think you’d be able to shift my unease. Your first point I already made, (because I’m so aware of it), the last one, of course, goes without saying.
You exclaim that a citizen’s income can’t make it any worse! This is where I’m far from sure. I understand why you say this and, I’d agree that ‘a rose by any other name smells just as sweet’, potentially more so, if it comes at less cost! However, (I think this feeling stems from ‘A dividend in the National Wealth’), whilst the government, (& many corporations), are apparently acting contrary to our visions; to offer something to all regardless of need, seems to have a subtle effect of making needs into more of an inducement, and being given to all somehow strengthens it as a kind of unjustifable compensation for the worse aspects of growth, (along with any good). For many years, the ordinary man has become dependant on many things without knowing the implications, and he is stuck with it now, but this national C.I., despite its benefits, has an underlying subtle implication which I cannot find the words to express more clearly. This does not necessarily reflect on its value. You will surely remain convinced while I remain unconvinced, but thanks for trying.
Think of it this way: At the moment, nobody owns the natural world, to all intents and purposes. That means people can do what they like with it and nobody calls them to account.
With a commons-based citizens income, everybody owns the natural world. If someone tries to abuse it, they take on everybody else.
So I think you’ve got it backwards. You’re thinking of the damage being parceled out to everyone to share the blame. I’m saying it’s giving everyone a stake in our natural wealth, so that everyone has an interest in protecting it.
Perhaps you’re misunderstanding the phrase ‘dividend in our national wealth’. Our national wealth isn’t just a slice of the economic pie. It includes the air, the water, the wildlife, the airwaves. These are good things. If more of us felt that these belong to all of us, that they are ‘ours’, we’d speak up more often to protect them.
As you will know Jeremy, most thoughts stem from premises, and this is the crux of our different thoughts – ‘If someone tries to abuse it, they take on everybody else.’, and ‘ If more of us felt that these belong to all of us,that they are ‘ours’, we’d speak up more often to protect them.’
I hope you are correct, and, if so, the sooner the better. However, I rather think that there are more humans, who, for whatever reason, (I have my own theory concerning basic human nature), have a huge propensity towards gaining money here and now, which over-rides future prospects, and, therefore, we could well have more willing to go along with abuse of the earth for their present profit, than those willing to take on the battle for the earth’s future; which, of course, would only make matters worse.
But hey! I’m not prophet! Perhaps the tide will indeed turn before much more pain :-). Or, perhaps you have more reason to think as you do, rightly or wrongly.
Well Jeremy, more reason for hope then – Promises from Paris. (The proof of the pudding is in the eating, Hopefully, the right ingredients will go in – in good time).