by Jim Rose in applied welfare economics, labour economics, labour supply, politics - New Zealand, welfare reform Tags: expressive voting, rational irrationality, universal basic income

Source: Morgan Foundation (12 April 2016) Four Lessons for Labour on How to Sell the UBI.

I will contract out to Geoff Simmons of the Morgan Foundation my reply to the claim yesterday by the Morgan Foundation’s Susan Guthrie that there are no negatives from a Universal Basic income. Simmons said:

With an unconditional basic income, most beneficiaries would be no better off than they are now (in fact sole parents would almost certainly receive a lower benefit).

Single parents are $150 a week worse off and retirees are $50 worse off per week if their current income support were replaced by a Universal Basic Income of $11,000 per adult.

Both were entitled to much more under the current welfare benefit system and New Zealand Superannuation respectively. Unemployment, sickness and invalid beneficiaries are about 5% better off under a Universal Basic Income.

Labour’s background paper described a Universal Basic Income of $11,000 as not enough. Guthrie is even franker yesterday about how inadequate a Universal Basic Income is for the poor:

A basic income policy would provide everyone aged 18 and over with an unconditional, tax free survival-level of income each and every year.

I will contract out to Gareth Morgan (2011) why a Universal Basic Income that provides a “survival-level of income” is not good enough:

Rather than decreeing a minimum wage and discovering the consequences for jobs and top-up payments, let’s agree on what is a minimum income every adult should have in order to live a dignified life and then see what flows from that. We begin by specifying the income level below which we are not prepared to see anyone having to live.

A survival-level of income and a minimum income on which every adult can live a dignified life are not the same thing.

Gareth Morgan’s universal basic income of $11,000 for adults makes most better off except those for whom the modern welfare state was established to protect.

Most of the evidence against the Universal Basic Income comes from examining the numbers put forward by its proponents such as the Morgan Foundation and its excellent online tool. Brian Easton (2015) put it well when he said:

Many advocates put the UMI forward without doing the sums. Those who do, find that the required tax rates are horrendous or the minimum income is so low that it is not a viable means of eliminating poverty. Among the latter are New Zealanders Douglas, Gareth Morgan and Keith Rankin.