Keep Basic Income Simple
Simplicity is a huge part of its enormous potential.
Basic Income is a brilliant idea, with many important potential benefits. It can help us build a better society — and more and more people seem to be recognising this. But there’s a major obstacle to overcome if we are ever to build a successful Basic Income system: The often disastrous political temptation to over-complicate things.
The three golden rules.
When designing a Basic Income system, there are three basic rules you should keep firmly in mind at all times:
- Keep it simple.
- Keep it simple.
- Keep it simple.
If you carefully follow each of these three basic rules, you shouldn’t go far wrong.
Naturally, people will look at your proposals, to assess the likely impact on their personal and family finances. In most cases, the news should be good. It’s relatively easy to design a simple Basic Income system, paid for out of progressive taxation, that will leave most people better off. Yes, some higher earners may see a fall in their disposable income, as a result of having to pay more tax, but perhaps that is only right and fair. And most people on low and moderate incomes will gain.
But here comes the problem.
The trouble is that individual circumstances vary widely, so there are bound to be some exceptions to the general rule. A small minority of people on modest incomes will have a little less money under your Basic Income scheme than they have now.
And some politicians will use this opportunity to seek popularity by throwing their hands up in horror and demanding urgent action to ensure this sort of thing can never happen.
OMG! Sound the alarm. Something must be done!
And here comes temptation.
At this point, it may be tempting to suggest modifications to your Basic Income proposals — or even modifications to the whole Basic Income concept— that might address these concerns and appease the complainers.
One possible response is the one that former US presidential candidate, Andrew Yang, suggested. He proposed leaving all existing welfare schemes in place and giving people a choice about whether to continue with the welfare support they currently receive, or switch to receive Basic Income instead.
An alternative response is to propose various supplementary payments, targeted at people who might otherwise lose out as a result of the switch to a Basic Income system. These would be paid in addition to Basic Income and might include, for example; a supplement for single parents, a supplement for people with high housing costs and a supplement to cover childcare costs. And there may be a considerable number of further supplements or transitional payments for all sorts of other reasons.
But down that path of complication lies the dark side.
“Once you start down the dark path, forever will it dominate your destiny. Consume you, it will.” — Yoda
Some of the critics won’t be happy until you’ve turned your system into a ludicrously complicated mess, in a foolhardy attempt to ensure absolutely no-one other than the super-rich could possibly lose out financially as a result of its implementation.
But any modifications that undermine the fundamental simplicity of Basic Income or compromise on its underlying principles, could easily end up doing much more harm than good.
An example.
Consider, for instance, the suggestion that a Basic Income system should incorporate a single parent supplement. This is one of the supplements that the Green Party of England and Wales currently propose.
On the face of it, it may sound like a reasonable idea. After all, single parents need extra help, don’t they? But think about it and you’ll see that this is a hugely problematic proposal.
For one thing, a single parent supplement invites government officials to poke their noses into people’s private living arrangements, to find out if they really are single, or if they’re actually living with a partner. Your sex life and personal relationships become the government’s business. And this is just the sort of government snooping that Basic Income is supposed to avoid.
Furthermore, the single parent supplement creates an incentive for couples with children to split up, as doing so could enable one or both of the partners to claim the single parent supplement.
It also creates a disincentive for couples to get together in the first place. Imagine the scenario: Two people, each with children of their own, are thinking of moving in together. They and their children might all be much happier living together as one family. And they could save a lot of money and reduce their carbon footprint too. But if they do move in together, they’ll both lose their single parent supplement.
So the government would be heavily discouraging people from doing something that could make everyone involved better off and nobody at all worse off.
It’s as if the government is holding up a big sign, saying, “Oi! No cohabiting! Or you’ll be punished!”
Like many other potential modifications to Basic Income, the single parent supplement adds complexity, requires extra bureaucracy and creates harmful incentives and disincentives.
You see? You’ve tried to help, but you just made things much worse, because you forgot the golden rule: Keep it simple!
Besides which, there’s a far better way to help single parents get the support they need. You simply make sure that the child rate of Basic Income is sufficient to provide for a child’s essential needs — whether they live with one parent or two.
Sometimes, what seems reasonable, isn’t!
Not all suggested modifications are as obviously flawed as the single parent supplement. Some seem quite sensible when looked at in isolation. But each one adds complexity and bureaucracy. And when means-testing is involved, that can mean the continuation of damaging disincentives to work and to save. And complexity, bureaucracy and damaging disincentives are precisely what we’re supposed to be getting rid of.
When it comes to designing a fair and effective tax and welfare system, several seemingly good ideas can combine together to make one very, very bad idea. And the key to avoiding this problem is to accept and embrace the enormous advantages of keeping things simple.
Don’t panic. Be rational.
So, instead of panicking and adding complications to our Basic Income proposals in response to every claim that someone on a modest income might lose out in some way, we should stay calm and respond with rationality.
Any change in the tax and welfare system is likely to have some short-term winners and losers. But we’ll all benefit in the medium and long term from having a simpler, more efficient, more just system.
Current welfare arrangements are often complicated and unfair. Some people get less help than is fair. For example, many existing welfare payments are assessed and paid on a household basis, rather than on an individual basis. Couples and families get paid less than they would receive if they lived separately and claimed as individuals. This is a way for the government to save money, but it unfairly penalises couples for staying together.
Other people, however, perhaps get a little more than is fair. Some people, for example, receive an exceptionally high level of support, because over-complicated welfare arrangements allow them to qualify for multiple overlapping welfare schemes all at the same time.
It should hardly be surprising, therefore, that a move to a fairer system will result in some people getting a little more than they get now and some people getting a little less. There’s nothing inherently wrong with that.
Remember the important things.
Some people mistakenly believe that the main point of Basic Income is to give people more money. It isn’t. The fundamental point of Basic Income is to give everyone financial security. It gives people a secure platform on which to build their lives and careers. It gives them more freedom to choose their own path in life. It doesn’t have to give everyone more money in order to be a huge success.
Some people could have a little less money than they have now, but still be better off, because they’ll have the added security of knowing their Basic Income will never be taken away from them, no matter what their circumstances.
I’m not saying there shouldn’t be any supplementary payments whatsoever. Some such payments will inevitably be needed — in many cases of disability, for example. And I’m not saying there can’t be any transitional arrangements, such as those proposed by Andrew Yang.
But we should be very reluctant to accept any modifications that risk undermining the fundamental nature of Basic Income as a very simple system to understand and to operate.
If you over-complicate things, add lots of bureaucracy and require means-testing or other assessments for supplementary payments, you risk perpetuating the inefficiency and unfairness that blight current welfare arrangements.
Simplicity is fundamental to Basic Income.
Simplicity is fundamental to delivering some of the key benefits of Basic Income. It’s fundamental to being able to reduce bureaucracy. It’s fundamental to improving work incentives. It’s fundamental to Basic Income being a platform for improved financial security and greater freedom. A complicated Basic Income system is not really a true Basic Income system at all.
Basic Income is a brilliant idea that can bring huge benefits precisely because it is so brilliantly simple.
