back to article You want the poor to have more money? Well, doh! Splash the cash

Phillip from London writes in to note that I'm really not a fan of the minimum wage. So, given that we don't want the poor starving in the streets, or that we might actually think there is some minimum income that a rich country should provide just because, what's the recommended Worstall method of achieving this? To which the …

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  1. Awil Onmearse

    "The existence of the welfare state raises my reservation wage. That obviously raises the amount the company must pay me: two loaves of bread, not just one"

    How many loaves of bread is always going to be much more a function of labour demand than the "reservation wage" with an engineered pool of unemployed.

    "Sweden is a rather nice place to live. Eye-watering tax levels...."

    Hardly. Not living in a Somali-esque dump has actual value too.

    1. Jason Hindle

      Life without too much fear....

      Have the economists put a numeric value on that? I think that's what economies like Sweden achieve above all else. I suspect pretty much any woman who remembers Iraq, pre regime change, will have similar feelings. Then again, I found Sweden a bit sinister. The fate of all nations that strive for a utopian ideal?

      1. Awil Onmearse

        Re: Life without too much fear....

        I've been here nearly quarter of a century, and I suppose I get the "sinister" angle especially the opaque bureaucracy rendered totally impenetrable by the equally opaque language. But it's most definitely not more "sinister" in hindsight than what we Brits would call "The Establishment" and their perpetual class warfare.

        One gets the feeling after a while here that you have stepped into a "Stepford Wives" society, that there must be something fundamentally and insidiously wrong, because it's just too fecking clean and ordered. But it's an illusion - Sweden suffers the same societal problems as anywhere else, just the symptoms manifest themselves differently, or to a lesser extent.

        More recently though the free-marketeers have been successfully attacking the working class as illustrated by the rise of fascist politics, like elsewhere in Europe. Using their media mouthpieces to instill immigrant-ageddon fears into the populace that nasty brown people will take away their summer houses and shit in their surströmming. In a country with such a massive immigrant population and a history of populist authoritarianism, this is a very dangerous game indeed

        For my part, living somewhere where working-class urban families can own a summer house in the countryside, can have their children looked after while at work without being bankrupted and the unions are together in a social contract with businesses and the government, made leaving Thatcher's desperate wasteland of despair a no-brainer.

        1. Matt Bryant Silver badge
          Stop

          Re: Awil Onmebiketogetbettersocial Re: Life without too much fear....

          ".....free-marketeers have been successfully attacking the working class as illustrated by the rise of fascist politic...." and there's the kneejerk Leftie response to any form of argument they don't wish to consider - "Fascist!" Just like Germany, Sweden needs a high level of immigration to keep the number of workers increasing to pay for the social system as the current workforce retires. It's like a pyramid or Ponzi scheme, and - like the majority of such scams - is destined to reach a point where the base is not broad enough to support the rest of the pyramid. In the UK the demographics are different, we don't need immigration as badly as Sweden or Germany, but we are already seeing the problems of reaching a tipping point with such issues as the State Pension. The Swedes are merely kicking the can down the road and pretending it is moral superiority rather than economic naivete.

          ".....made leaving Thatcher's desperate wasteland...." Well there's the solution, then - simply ship all our "socially-enlightened" slackers and wasters to Sweden.

          1. Awil Onmearse

            Re: Awil Onmebiketogetbettersocial Life without too much fear....

            Dude, one small town in Sweden called Södertälje took in more refugees from your Iraq misadventure then your entire miserable shithole of a country and it's northern neighbour combined.

            Your ignorance on the well documented rise of fascism in Europe is par for the course for an ignoramus, I suppose.

            1. werdsmith Silver badge

              Re: Awil Onmebiketogetbettersocial Life without too much fear....

              I spent some good times in Sweden working there in the 1990s, very impressive place. Interesting to see how they made a success of manufacturing and engineering, whilst similar neighbours that had plentiful oil did much less of that. Turns out that some of this manufacturing wasn't sustainable for a nation of less than 10 million heads. But to this day, I promise you can engineer something as good as you can, then pass it to their engineers and they will find ways to improve it. Geely know this.

              I was also impressed that I could go and enrol on a degree and not have to pay a penny. I am disappointed that education didn't come up as a major manifesto point at the last UK election. Education is number 1, and your best path out of the social mires over the long term.

              The size of the population is the important thing. I don't believe that you could apply a Swedish taxation/social model to a nation with 60 million+ population.

              However, if Scotland would (please) hurry up and break any Westminster ties so that they are only ruled by Germany then the Swedish style system might work well there (although not the Systembolaget, there is no way the Scots are going to accept that sort of state interference - minimum unit price is bad enough).

  2. chrisf1

    Tax and spend!

    Nice review. Although on:

    By taxing we make ourselves poorer (the levying of any tax stops some economic activity from happening, however glorious the cause we're going to spend the money on).

    At some point a tax in a democracy is what we , en masse, choose to spend our money on.

    1. Tim Worstal

      Re: Tax and spend!

      Indeed. It's not some killer argument against taxing. Rather, it's just a reminder that a tax, any tax, has its economic cost. From which the lesson I take is that whatever we decide to spend the tax money on had better be worth more than the activity we've just destroyed by taxing in the first place.

      A rough rule of thumb is that, at current taxation levels, raising £1 in tax destroys £1.30, £1.40, in economic activity. There's very definitely things we can spend tax upon (keeping those ravenous French hordes from our shores for example) which are worth more than £1.40 for each £1 we spend on them.

      Other things that current tax money is spent upon, or some proposals for spending, not so much.

      1. Martin an gof Silver badge

        Re: Tax and spend!

        Never having studied economics beyond a "business" module to an electronics degree in the 1980s, I really enjoy your articles - even if I don't always agree with either your sentiments or your solutions. Apologies if I seem to have muddled thinking in what follows. This article was particularly interesting, and a question was forming in my mind, crystalised when you said:

        A rough rule of thumb is that, at current taxation levels, raising £1 in tax destroys £1.30, £1.40, in economic activity

        I've often had the feeling that certain flavours of government see that argument slightly differently, and it ties in with my unease about the VAT system as we have it in the UK. The fact is that if you give more money to the poor they are much more likely to spend it on life's necessities - many of which are VAT exempt - than on life's luxuries. New school uniform for the children, slightly better quality sausages for tea, putting a bit aside in the building society "for a rainy day", that sort of thing. I am not of the school of thought that there are hordes of lazy layabouts "out there" spending their benefits on fags, Sky Sports and foreign holidays, despite living in one of the country's poorest areas. A few, perhaps, but not hordes.

        Taking money away from the rich conversely reduces their spend on luxury items which are all subject to VAT or a similar tax and hence it reduces total tax take, and some governments are afraid of that, ignoring the economic benefit to (say) the farmers who farm the pigs that end up in the sausages. These governments also use the argument that richer people, taxed more heavily, can take their "incomes" (and hence tax) elsewhere, but I wonder if that really has much of a genuine effect?

        This is related to the dog-in-the-manger, or the "I'm alright Jack" attitude I seem to hear more and more often, particularly from those who don't have to worry whether they will have to cut back on the shopping next week in order to afford the travel costs to work. This attitude usually manifests itself in arguments such as "I pay for private health insurance, so why should I also contribute to the NHS?" or (and I get really cross about this one) "I have taken the decision not to have children, so why should I pay to educate yours?"

        The problem with the tax system is that it seems many people don't actually understand what it is, how it works and what it's for. Your "tax and redistribute" concentrates for simplicity's sake on direct redistribution, but ignores the vast benefit of indirect distribution afforded in this once enlightened country by the very existence of state-funded schools and the fantastic National Health Service which has paid my family back, just in the case of one child, probably more than I have personally paid in over the 20-odd years I've been working. We have friends in two other families who have benefitted even more than we have.

        I also have long wondered if, in these days of everything computerised, there's a way of avoiding the high marginal tax rates that you correctly point out can be a disincentive to some kinds of work. Can we not have such a fine-grained progressive tax system that there are effectively no step-changes at all? Stamp Duty on house sales would be an excellent place to try it out because the step-changes in that tax very obviously distort the market - if house prices in a particular street are around the £250,000 mark (for example) then it is nigh-on impossible for any individual house to break through that £250,000 barrier unless it can make the jump to somewhere around £270,000 - this is a big ask if you're trying to justify adding a kitchen extension!

        Might fine-graining income tax also help to alleviate the problem of marginal tax increases, particularly as benefits begin to be withdrawn?

        Crumbs, sorry, didn't mean to get carried away. Better go do some work!

        M.

        1. Tim Worstal

          Re: Tax and spend!

          We usually think of VAT working the other way around. The rich save more money (not subject to VAT) and the poor spend all their money (much subject to VAT). As it turns our,m empirically, it's a bit of a wash. As you note may of the things that the poor will spend upon do not carry VAT. And the rich still save a higher portion of their incomes.

          So, in actual effect, VAT is roughly neither regressive nor progressive. That's for the UK though. Change what is subject to VAT (Sweden's VAT covers food I think?) and you can easily make it regressive, meaning that the effect you describe comes into play.

          " but ignores the vast benefit of indirect distribution afforded in this once enlightened country by the very existence of state-funded schools and the fantastic National Health Service "

          One interesting calculation which I've regularly mentioned, even if not around here. The TUC o0nce worked it all out.

          Income, between the averages of the top 10% and the average of the bottom 10%, is about 30:1. When you get to consumption, so including all tax and benefits, and also the effects of things like the NHS and free schooling, is about 6:1. That's a pretty highly redistributive system over all.....

        2. Doctor Syntax Silver badge

          Re: Tax and spend!

          "this is a big ask if you're trying to justify adding a kitchen extension"

          That depends on why you want the kitchen extension. Are you wanting it because to satisfy your desire to live in a house with a bigger kitchen or as an investment?

        3. Quip

          Re: Tax and spend!

          "Duty on house sales would be an excellent place to try it out because the step-changes in that tax very obviously distort the market "

          It may have escaped your notice but that particular problem was fixed nearly a year ago. (and in July another anomaly re tax relief on BTLs was addressed, if not yet actually implimented.)

        4. David Roberts Silver badge

          Re: Tax and spend!

          "Stamp Duty on house sales would be an excellent place to try it out because the step-changes in that tax very obviously distort the market - if house prices in a particular street are around the £250,000 mark (for example) then it is nigh-on impossible for any individual house to break through that £250,000 barrier unless it can make the jump to somewhere around £270,000 - this is a big ask if you're trying to justify adding a kitchen extension!"

          Haven't the government already done this? A year or so back?

          No step change at 250k any more and the price distribution has smoothed out. An apparent side effect is that once prices started moving past 250k they achieved a bit of momentum and were soon pushing 270k.

          The cost/price increase justification applies mainly to developers (professional and amateur). If you need a bigger kitchen for quality of life and you aren't planning to move before you have your use out of it then increase in capital value is just an added bonus . Most assets depreciate from new so housing is in some ways a special case.

          1. Martin an gof Silver badge

            Re: Tax and spend!

            Re: stamp duty, yes, sorry, I'd somehow missed that point. Ho hum. Perhaps not exactly what I meant by "fine grained" but a whole lot better than the previous situation.

            Regarding adding kitchen extensions (or in our case a kitchen / dining / bathroom / several bedroom extension) you always have to have an eye on the effect on the "market" value of the house even if (like us) it is not your intention to put the house to the market any time in the next four decades. Morgages (for one) rely on such things ;-)

            M.

      2. Doctor Syntax Silver badge

        Re: Tax and spend!

        "From which the lesson I take is that whatever we decide to spend the tax money on had better be worth more than the activity we've just destroyed by taxing in the first place."

        Which puts us right back with the problem of computing utility, which is what you need to determine the "worth more" bit.

      3. Anonymous Coward
        Anonymous Coward

        Re: Tax and spend!

        I must admit that I am no expect on economics but your rough rule of thumb must completely ignore what they spend the tax upon.

        In the UK for example the taxes paid for all manner of things including CEGB, BR, BT, HMPO etc we have since sold all these off to people who mostly do not pay taxes here and have all had to pay more for the same service ever since. Also your premise seems to fail to take all the staff training that is still making money albeit for the private sector now.

        That £1 of tax invested in infrastructure pays dividends and allows all sorts of new businesses to be created off the back of a not for profit state infrastructure. If they had not collected the tax then all those business would have failed and the loss in job and necessary infrastructure would have cost much more.

        Does current economics as a subject make no reference to history at all then? does the money appear from nowhere ?

    2. Charles Manning

      Need to tax fun

      For there to be fairness, we need to tax fun.

      Person A: spends copious hours learning, getting good marks, goes to university gets into the workforce at age 23 with a mountain of debt, no income for their student years and a nice tax burden. A works hard, including extra studies/research on week ends to keep current with a complex technical job. A does not get paid overtime.

      Person B: dicks around at school, LOLs with his pisshead mates and does not go to university, starts earning at 16 with a whole lot of dole and social services paid for by A. B does not have to keep refreshing skills to keep earning. B never works more than 9-5 unless he gets paid overtime.

      We're told that this is fair because A has surplus income and B has a need (really a want) for some of that.

      The only way for this to be fair would be if B was taxed some of his leisure to give it back to A. But how do you tax leisure?

      Easy: B can come mow A's lawn and do other chores which allows A to get some leisure time back.

      1. Sam Liddicott

        Re: Need to tax fun

        Absolutely, tax the leisure.

        If they want the money, they MUST sacrifice the time.

        Some would prefer to keep the time and not have the money.

        http://blog.sam.liddicott.com/2014/01/a-plea-for-social-equality.html

        True democratic wealth is time: everybody has 24 hours of it a day.

        The significant social inequality of the day is that some peoples time is not exchangeable for much value, while other peoples time is very much in demand and exchangeable at a high rate.

        I simplify somewhat, for a person can sometimes exert control over their exchange rate by means of how much effort they put in; but even at maximum effort there is still a large disparity between the exchangeable values of the time of different people, or in different locations.

        In the corrupt imperial west there is a notion that 8 hours of effort per day should be exchangeable for necessities of life (and some discretionary comforts) but the opportunity to make this exchange is not granted equally to all people (and nor is the standard of life).

        In the name of social conscience and humanity, this inequality is often reasonably addressed by moving a surfeit of value from those who found favourable exchange, to those who who found a poor rate of exchange.

        Yet paradoxically, the extreme inequality of those who found no exchange is addressed by an attempt to provide the value of life necessities with no exchange required.

        This does not introduce equality but instead introduces further inequality for in transferring the surfeit of value to those who find no exchange, it leaves them with a surfeit of time. It reduces them to the status of beggar and provides no way to contribute.

        It would be more equitable to provide opportunity of exchange to those who found no exchange, making all equal contributors to society from the universal and collective wealth of time, and condemning none to the status of beggar.

        TLDR: Or in other words, why in the UK when taxes are going up, and public works are going down, why, are we paying people to do nothing?

        It is no socialist triumph to lose the working class and gain another idle class (however unwilling).

        Let the time of each be valued equally - sufficient for life, and let all contribute.

        And here's hoping for a shorter working day for all, enough time for dancing and singing.

        1. Dr. Mouse Silver badge

          Re: Need to tax fun

          Let the time of each be valued equally - sufficient for life, and let all contribute.

          Interesting. However, if you value everyone's time equally, there is little incentive for a person to better themselves.

          Let us take 2 people. A is highly intelligent, B is near the bottom end of the intelligence scale. A could be a scientists, or a mathematician, or an engineer. B can only do "menial" work, labouring or stacking shelves. In our system, A would go to university and get a good, well paid job. B would work for a supermarket. They would both do their best, to achieve the best wages and/or quality of life they possibly can.

          Now, move to a world where all time is valued equally. While going to university, getting a good education and getting a good job can be their own rewards, they often come with a great deal of stress. As all jobs are valued equally, what is to stop A from taking a job which does not tax him? He could work as a low-end office worker, pushing papers. Boring, yes, but easy and stress free. He can coast through life, getting paid exactly the same as someone of the same intelligence who chooses to work hard. He is also depriving the world of his contribution. Meanwhile, B is in the same position as before, albeit with possibly a little more pay.

          So, to make this fair, we would need to grade people on their abilities, and pay them in relation to the "effort" they put in, and how close to their maximum potential they are working. But how would one objectively measure this?

          So, as you can see, this is not a simple system to administer fairly. It would be easier to administer it fairly than the current system, but is more likely to create an unfair system where effort is not rewarded.

      2. Anonymous Coward
        Anonymous Coward

        Re: Need to tax fun

        @Charles Manning

        You assessment is both flawed and niave:-

        Person A and B are the same age, Person B is paying for person A to attend higher education until Person A starts paying tax. Even with the loan system Person A is relying upon a loan which is of course obtained from tax payers. Yes the tudents pay some interest but typically it is below what they would normally pay for a private loan for the same amount. Person A finally starts putting back into the system directly( assuming they didnt fail their course) but will typically start working at a rate only slightly above person B who has been working all this time and ideally will have been promoted or at least had their wages increase due to their greater experience. It will take quite a while before Person A has paid off his loan and caught up with the lost tax revenue assuming he didnt fail and that he studied something that person B could not do without the benefit of his higher education only then was the investment worth while for the country.

        Person A is younger than Person B and this one is even more unbalanced against person B, he never got to go for higher education and has spent years paying tax so Person A can enter higher education. Person B is told that by paying for Person A to obtain higher education that results in more money comig into the country than just having 2 Person Bs however this requires that the education system is cutting edge and that Person A obtains a qualification that proves valuable to the country that funded his studies. Typically those Person As without a Science/Engineering qualification end up as middle managers robbing Person B of the job he would have got otherwise and also the incentive to keep plodding on in his go nowhere job.

        Person B is the younger, his parents paid a percentage of the costs for Person A to attend higher education and so obtain either a job which brings in more money to the country or more typically restricts Person B from progressing, that is assuming he can find work that will allow him to eat and pay taxes simply because Person A wants someone to cut his lawn for him so voted to relax immigration laws flooding the country with cheap labour however Person A doesnt want to pay high taxes either because "hey cut the ladder off behind you"

        Given that Science and Engineering are hard lots of students in higher education are allowed to study courses that result in the participant ending up as a middle/higher management, i.e. they took higher education in a subject where there are no jobs or little demand.

        Given that Person B and his parents might have started out as a ignorant dicks doesn't change the fact that without them Person A would not have any access to higher education.

        Before the masses had "free" access to higher education the old grammar school system cherry picked the very best and yet most were still limited to advanced rather than higher education up until the '60s. The pension generation of workers spent years when they werent killed in wars paying taxes so higher education and social support systems have been availible for a couple of generation. These people may also include your parents in which case they too paid a percentage towards giving you the chances they never had but then again maybe your parents werent in this country at that time in which case you are not only robbing Person B of his legacy of access to education but also you want him to slave for you too.

        There are only so many jobs availible without contineous investment in people however this country is bringing in more people all the time, the premise being to pay the taxes for persions etc. However the chances are that during your lifetime the goverments have not been investing in the country and so will be unable to provide access to higher education for the masses for much longer. If there are more people than jobs then the wages and hence taxes paid are lower, additionally the people coming here are going to also want their children to have access higher education/social care etc and there is no longer any real investment in this country at all.

        Resources are going out of the country and little money is coming back in again, we only lasted this long because we have been living on borrowed time because this country used to be so insanely rich and even with the last two major wars there was still money left to last this long.

        Now a few hold all the money and all the family silver/publicly held assets we no longer have to sell to people who do not pay tax here. We stopped investing in Education, Science and Engineering etc because services is "cheaper" than industry because services only require semiskilled workers resulting in this country being on the last part of the slope to what we used to call 3rd world economies.

        Those high tech companies still having a base in the UK will very soon be moving to where they can access cheap highly educated workers i.e. not here and all because you would prefer someone to cut your lawn than pay for education for you and your children.

        1. Anonymous Coward
          Anonymous Coward

          Re: Need to tax fun

          Yes, Person A can have Person B cut his lawn when he pays B for the 9 years+ he was carried. Include the interest and the fact that the money has been devalued. Hell, I will cut your grass at £30000 per garden no problem gov'nor.

          No one forced Person A to enter higher education, they chose that for themselves and person B had to pay for it. Staying at work outside of 9-5 is all Person A choice and to be frank if the company needs person A to work more than 9 to 5 he is preventing another tax paying person A from having a job.

          Ignoring that going to University is the best time in your life you now have a career in a subject you presumably love, Person B never got a choice about anything he took the best job he could find and his pleasure is only at getting off shift.

          Try having a little humility for the people who paid for all the best years of your life and a career in a subject you love. Yes you worked hard maybe even as hard as Person B but now your days are like a holiday compared to Person B's and his isn't going to change until he looses his job or he dies.

          When the works dries up here you can take your qualifications and go to another country, Person B is stuck here in the mess you walked away from with no chance of escape for him or his children nor any compassion from the people he supported with the sweat of his brow. Shame on you

          1. dogged

            Re: Need to tax fun

            Person B pays tax on his overtime. Person A spent that tax on getting pissed in the Student Union bar.

            Person A can fuck right off.

          2. werdsmith Silver badge

            Re: Need to tax fun

            Regardless of how well you are educated and how nice the jobs are, most people still end up being held to ransom for the debts that they took on in order to support the lifestyle they expect.

            Until we break the Mortgage shackle then we never become truly free.

            So the only real way out is to do something extraordinary and gain true financial independence.

    3. nijam

      Re: Tax and spend!

      > At some point a tax in a democracy is what we , en masse, choose to spend our money on.

      Only in the most tenuous sense. In terms of what we get to vote on, there is little if any choice about tax levels and government expenditure.

  3. graeme leggett

    Jobs and unemployed

    It strikes me that the desired target is a net income generating job for everyone who is 1) capable of working 2) available for work and 3) needs/desires to work.

    (I'll leave to one side the mythical horde who are desirous of nothing more than self-medicating themselves through daytime tv because they are adequately supported by benefits - if they do truly exist in huge numbers, I've no idea how to sort them out)

    Where do we find these jobs? Do we trust that if we invest in the right places, that jobs will beget supporting/related jobs which in turn will generate further cash to spent in the local economy until it's wall-to-wall artisan producers of 'stuff'?

    At what stage can we aspire to Star Trekkian levels of utopian employment where no one need fear being unable to afford the latest zipperless jumpsuit?

    Or is it that we are still in the long slog of development and these current generations have to accept that while better than a hundred years ago, it is not us but our descendents that will stand on the balconies of silver sky cities. And the only pause to their joy will be reflection on how their great-great grandparents suffered in call centres or as supermarket shelf stackers.

    1. ecofeco Silver badge

      Re: Jobs and unemployed

      The kinds of jobs that pay a decent living and are long term that do not rely on market whims were usually provided by macro engineering projects, something the Western Alliance of the U.S, GB, and Japan seem to longer have the balls for.

    2. Charles Manning

      Creating jobs is easy - creating value is hard.

      Want to create jobs? Easy.

      Ban all machinery for building roads. Don't allow people to use even picks and shovels. They can just use plastic teaspoons. That would create jobs building roads and making plastic teaspoons. Making a square foot of road a day would be a great accomplishment, as would whittling the 50 teaspoons each road worker would wear out.

      But of course that does not generate value.

      The reason we have stuff better than what our forefathers had 200 years ago is that we have been able to free up skilled people and surplus resources to create more value. 200 years ago not starving to death each winter was a major accomplishment. Now we can redirect our talents into creating much, much more.

      As our technology gets better we can use more and more technological means to create value. That means people need to find new ways to generate value to make themselves useful.

      1. Anonymous Coward
        Anonymous Coward

        Re: Creating jobs is easy - creating value is hard.

        Wrong, think for a moment about what you spend your extra money on, what percentage is essentials( food, heat, water, a roof over your head) and what luxuries and savings both of which are out of reach of the people of an increasing number in this country.

        200 years ago the majority may have been as risk of dying during winter but that was because like you the minority believed they had more right to the wealth than anyone else and actively caused the deaths you are referring to.

        Technology has not increased jobs infact it has done this opposite and as to value, this is always relative to the individual, name any wealth you like and I bet you will trade all you own for a weeks worth of food and water when you are starving.

        I am not anti-technology it is simply that I dont believe people should have to starve when there is food going to waste only keep the prices high. We do not need to reduce population the west we already have far fewer children than the developing countries so why are you advocating starving people to obtain your meaningless value.

        Your idea of value is tat, yes work is easy to create and can have lasting benefits see "the new deal" but unfortunately the people in power now are just like the ones 200 years ago and prefer to see their countrymen starve until a thinking goverment forces them to put back some of what they never had to work for.

  4. Anonymous Coward
    Anonymous Coward

    I know it would be more complicated but wouldn't NIT (negative income tax) be better than UBI?

    1. Tim Worstal

      Depends how much you worry about marginal tax and benefit rates as you go past the minimum income level. I worry a lot about it so prefer the UBI. The advantage of the NIT is that it's much cheaper. And we already pretty much have it really: working tax credits. That's what Friedman's original NIT did morph into when people tried to actually apply it.

      1. dogged

        The problem with UBI is Housing Benefit.

        If your UBI is not high enough to pay for a roof over your head, you still have to maintain the whole means-testing infrastructure.

        1. dotdavid

          I would have thought that UBI paying for housing would also have the problem that housing costs hugely varying amounts countrywide but hardly anyone wants to move to where it is cheaper*. Scrapping housing benefit and replacing it with UBI might result in forced migration and perhaps "poor people ghettos" in cheaper areas with no jobs and no hope for the inhabitants to ever get off "the basic".

          * often for good reasons, like "there are no jobs there", granted.

  5. Warm Braw Silver badge

    Where's that perfect world when you need it?

    Taxation and redistribution are not without their problems. It's an inefficient system - you need an army of bureaucrats to collect the tax and then decide who deserves to get what in the share out, plus you're going to end up giving at least a portion of the money you've collected to people who don't really need it. Also, in practice, it's entirely unpredictable for the recipient - a change of government, a change in tax credit thresholds or housing benefit rules and you're literally out on the street: the purpose of welfare is supposed to be to prevent vulnerable people being subject to calamitous changes in their lives owing to circumstances outside their control.

    A minimum wage is very simple - very little administration and your income is not subject to constant political interference, at least to the same extent. The present government seems to have ignored the obvious consequence, though, that it too will have to pay more for the services it procures (most importantly, care) and is pretending that the "living wage" is all upside. It isn't - the cost of the higher wages has to come from somewhere. But that's just a form of redistribution too, and the market will presumably work out where people are most gainfully employed.

    1. nijam

      Re: Where's that perfect world when you need it?

      > you need an army of bureaucrats to ... decide who deserves to get what

      I think the whole point was that you don't need them, everyone gets the same. Remember that means-tested benefits are perniciously-stealthy income tax; I think, and suspect Tim will too, that income tax is OK but it would be even better without such distortions. And don't even get me started on the pathetic pretence that (employees') NI contributions are somehow not income tax.

  6. Will 28

    The child sized elephant in the room

    It strikes me (and therefore is probably irrelevant) that most discussions on reducing poverty and ensuring a fair distribution of wealth always conveniently ignore one of the biggest financial costs to a family, which is the kids. I can see why, as Tony Blair demonstrated with his education x3 speech, once you start pulling on the parenting strings, people lose objectivity.

    Without this consideration it kind of makes all the rest seem redundant. It's all very well to guarantee an income to an adult, but if they've got 3 additional mouths to feed then they're signficantly worse off than the person that doesn't. You could easily argue that kids are a luxury, but there are unplanned pregnancies, and if there's a moral imperative to help the adults out of poverty, surely it applies to the children too? There's also the economic point that we need to keep fresh people coming through to pay for those retiring.

    I'm not suggesting I have an answer, just that without it taken into account we're not really addressing a real world problem.

    1. Martin an gof Silver badge

      Re: The child sized elephant in the room

      ...most discussions on reducing poverty and ensuring a fair distribution of wealth always conveniently ignore one of the biggest financial costs to a family, which is the kids...

      It's all very well to guarantee an income to an adult, but if they've got 3 additional mouths to feed then they're signficantly worse off than the person that doesn't. You could easily argue that kids are a luxury...

      Start down that route though and you end up tangled in such pleasantries as eugenics. Are people poor because they have (too many) children, or do they have too many children because they are poor (and have nothing better to do / and need to send them out to work)?

      I have four children and there have always been people who seem to make it their job to make me feel guilty for that. Now, of course, it's the government, talking about removing child-related benefits from child number 3 (or is it 4?) onwards. Anyone fancy a one-child policy?

      We are not the best-off family on the planet and part of the reason for that is the children. My wife, who is far more highly qualified than I, has effectively taken a career "pause"(*) of fourteen years in order to look after the children, only recently getting back into a job that values her and where there are real prospects for progression. We took the hit on income because neither of us has a career where the income we could bring in by working full-time outweighs the childcare costs and the disruption to family life costs of going part-time.

      The thing is, now that we're beginning to have an income where we can consider expanding our small 3-bed bungalow to cope with four upcoming teenagers, our marginal tax rate is going through the roof as it seems as if every extra pound the wife earns come off our income in reduced benefits and increased taxes.

      And (to return to a subject I mentioned earlier), VAT is a particular problem for us. Ok, so it's a large extension we are planning but a quantity surveyor we employed calculated that because VAT is applied to extensions, but is not applied to "new build", we could knock down the whole house and rebuild it from scratch for hardly any more than it would cost to build the extension. We'd benefit in other - less tangible - ways too because a new build that we project-manage is bound to be longer-lived and better "quality" than a 1960s developer-built house, and will definitely be better insulated, not so damp and cheaper to run.

      But I wouldn't be without the children. They are all going to be huge assets to society when they enter the world of work, and some would say that they are already making their mark - entrepreneurial eldest son funds his expensive Hornby hobby by cutting elderly neighbours' lawns.

      M.

      (*)Apart from the maternity leave periods, she has continued to work in (or near) her chosen field, but her jobs have all been part-time and nearly all on temporary contracts which make it flippin' difficult to plan family finances more than a few months in advance. They also seem to confuse the tax credit people :-)

      1. Tim Worstal

        Re: The child sized elephant in the room

        "because VAT is applied to extensions, but is not applied to "new build","

        I can't recall which Chancellor brought that in but I would still call it one of the great idiocies of he UK tax system. Truly cretinous in fact.

        1. Anonymous Coward
          Anonymous Coward

          Re: The child sized elephant in the room

          its been like that a long time. Its not just extensions but also renovations, that's why you quite often see building that could be renovated and converted pulled down and something new built in its place

        2. Anonymous Coward
          Anonymous Coward

          Re: The child sized elephant in the room

          Some might suggest that the same government had lots of finacial support from the building trade and introduced many changes to benefit said group.

      2. Will 28

        Re: The child sized elephant in the room

        Indeed, a good illustration of the added complexity that we seem to be avoiding in the discussion.

        Just to be clear, I was not seeking to be one of those people who make you feel wrong for having many children. I think when I said you could "easily argue that...", I intended something more along the lines of "lazily dismiss this factor by saying that...".

      3. Richard 12 Silver badge

        Re: The child sized elephant in the room

        At some point, we *do* need to get the average family below 2.0 children - or to put it another way, the average offspring-per-person below 1.0.

        Otherwise the planet is not going to be able to provide sufficient (insert stuff here) in the future - infinite population growth is obviously not sustainable in a closed system.

        The part that really should worry everyone is that we don't know what the carrying capacity of the planet is.

        We may only find out once it's been greatly exceeded for quite some time, which will have pretty hideous results.

        A lot of people think we've already exceeded it. This may or may not be true - the error bars are large - but we cannot be that far off.

        1. DaveDaveDave

          Re: The child sized elephant in the room

          "A lot of people think we've already exceeded [the carrying capacity of the planet]. This may or may not be true - the error bars are large - but we cannot be that far off."

          I really don't think we're even vaguely close to it, or even to a point where we'd be undesirably crowded. We're still a very long way off from any crisis point, and will almost certainly never reach it. The more moderate predictions are that the global population will peak at around 8-10 billion, some time in the next century or thereabouts.

          As far as living conditions go, it's noteworthy that the US has a population density about a quarter or third of the EU's - and the EU is hardly a densely built up urban area, it's a perfectly pleasant place to live with a variety of land uses including extensive nature reserves etc. Essentially that means you could triple or quadruple the US population - an extra billion or more people - without noticeably impacting on anyone's quality of life.

          Or there's the UK's population density - double the above figure again, and while we're not hermits here, we're not massively overcrowded.

          Japan's definitely crowded, but it has at least ten times the population density of the US without being a total shithole.

          And of course there's New York, which has about 25k people per square km. If they all lived in cities that densely populated, a billion people would take up just 40 sq km, which is nothing.

          So, pretty clearly land area isn't a problem. What else will be? There's plenty of un- or under-used agricultural land, let alone things we could do with sea farming - and actual peak capacity would include Soylent Green... - so food's not a limitation. Power could be, except we're moving off fossil fuels anyway. And as our esteemed host has written a book about it, we can't argue that metals etc are in short supply.

          1. Esme

            Re: The child sized elephant in the room

            @DavDaveDave - your tolerance for crowded living conditions must be greater than mine, then. I start feeling uncomfortable when the villages are less than fifteen minutes apart and the towns are over about 10K population. I've managed to adapt to living in a city (only moved here because at the time I was unemployed and my then new parter wasn't), but I still try not to think of all those miles and miles of tarmac and brick and concrete and uncountable people around me - creepy (shudders). It's existence, but I wouldn't call it a healthy way to live.

            On a different point, as well as mites and overuse of pesticide, over-abundance of local farmland has also been implicated in the decline of bee populations, so I wouldn't be too gung-ho about how much we can do with agricultural land unless there are some serious changes in the way that farmland is managed over current practices.

            (Commenters please note - I am not a back-to nature Luddite - I'm often techno-skeptical, but I like my shinies as much as the next geekette, and I know very well that my personal ideal world is highly unlikely to ever exist even if it isnt actually impossible. Certainly much lower chance than winning the lottery two weeks running!)

            1. DaveDaveDave

              Re: The child sized elephant in the room

              "@DavDaveDave - your tolerance for crowded living conditions must be greater than mine, then. "

              Probably, you seem to have pretty strong feelings on the subject - but really, I think it's just a matter of taste. What I was trying to do was to look at it as a practical matter: there are places which I also feel are a bit densely populated for my taste, but they're not generally considered notably bad places to live. It's illustrative to see how higher-but-still-low densities would work out in terms of the US population. That really is a staggeringly empty continent still.

              I'd also note that your definition of being uncrowded would round and about seem to describe Norfolk. Even rural Norfolk has a population density 4x or so that of the US.

              "I wouldn't be too gung-ho about how much we can do with agricultural land unless there are some serious changes in the way that farmland is managed over current practices."

              To be clear, I'm not suggesting there are no problems with increased population. Just that we're a long way yet from the point where those problems require us to make really serious choices/compromises.

          2. 9Rune5

            Maximum population

            "I really don't think we're even vaguely close to it, or even to a point where we'd be undesirably crowded."

            AFAICT the UN disagrees. They are promoting insects as the next big thing: http://www.fao.org/forestry/edibleinsects/en/

            It may be linked to their less-than-impressive IPCC efforts (food production emits CO2 hence must be stopped) for all I know, but they seem concerned with the rising population and all it entails.

            In Norway, we long ago passed the mark where we are able to feed ourselves (and not rely heavily on food imports). The ocean seems less willing to sustain our population and there is not much land left to grow food. Yet our previous government argued that our population must increase, otherwise there won't be enough punters around to wash our backs as the current generation of worker bees grow old.

            YMMV I suppose, but I do worry.

        2. Peter Gathercole Silver badge

          Re: The child sized elephant in the room @Richard 12

          No, we really don't need an average family size below 2. One-for-one replacement in the global population as a whole, yes, but...

          Because of lifestyle choices and mortality, if you're talking about the average 'family' - defining a family as a social unit that includes kids, which would exclude people living on their own or couples not having children, the average family size needs to be between 2.3 and 2.4 children in the UK to achieve a stable population. In other countries with higher mortality rates, it could be higher.

          The current plan to eliminate child benefit in the UK beyond 2 children will actually detrimentally affect the demographics of the country, IMHO.

          <contentious><generalised>The financially responsible families, who are most likely to have children who grow up to be like them will be choose to keep their family to two children (or if they're real do-gooders, to just one child). The families who have a have children now and worry about how they're going to raise them later mindset will not really care, and will still expect state support. Kids tend to grow up like their parents</generalised></contentious>.

          The effect on the population could result in the rise of a new 'chav' generation, skewing the population towards under achievers, hangers on and people with an expectation that the state will take care of them. Exactly what is not required.

          I know that I'm generalising, but in general most developed countries have a population stability problem, with some countries like Japan actually having a declining population some time back.

          What the world really needs is sensible population control policies, together with education to back up these policies, targeted at all countries, especially those with the highest population increase. It won't happen, as the UN charter actively prevents one country from interfering in another countries internal affairs, and the countries that most need the control are the ones least likely to implement or accept it.

      4. Anonymous Coward
        Anonymous Coward

        Re: Anyone fancy a one-child policy?

        China has it for a damned good reason, they had too many people and needed population control..

        Now in the UK we don't have that issue, but families that are on benefits breed kids that are more likely to be on benefits, it is an ugly truth...

        The ugly solution is to stop them having kids (or limiting the number)

        The nice solution is to raise the education standard and indoctrinate kids into the idea that working is the right thing to do and it is wrong to sponge off the state, unfortunately State schools will never do this.

        1. Graeme Sutherland
          Boffin

          Re: Anyone fancy a one-child policy?

          Nearly half the world's population lives in countries with sub-replacement levels of fertility, so it doesn't look like a one-child policy is necessary.

          As for China, the government has been watering down the birth control laws in recent years. But people still aren't that keen on producing far more children.

        2. Dan Paul

          Re: Anyone fancy a one-child policy? No!

          The fact is that the ONLY REASON why China has been successful in having such a "One Child " policy is that it is effectively a Dictatorship and that "Benevolence" doesn't enter in to the equation.

          We have a similar issue in the States with multi generation welfare clients having more children just to get more welfare benefits. It is difficult to actually limit the number of children one is allowed to have, but it is not difficult (Only politically unwise) to limit the amount of welfare money being paid per child.

          Same goes for "immigration". Who is going to pay for the upkeep of wave after wave of immigrants; since they did not come here legally with a sponsor and a job?

          The left uses these issues as a wedge and a vote buying tactic. From now on, the money to pay for these concepts should only come from registered Democrats pockets. That will fix the problem.

      5. Squander Two
        WTF?

        @ Martin an gof

        > I have four children and there have always been people who seem to make it their job to make me feel guilty for that.

        Agreed. Some people are utter arseholes about your having children. Especially the environmentalists.

        > Now, of course, it's the government, talking about removing child-related benefits from child number 3 (or is it 4?) onwards.

        Er, what? How is that trying to make you feel guilty? The government didn't pay for my last laptop, but I don't think they're trying to make me feel guilty about owning one.

        > Anyone fancy a one-child policy?

        Are you seriously suggesting that a government who pay you money for your first two living children and a government who outright ban you from bearing more than one child even if that first child dies are somehow behaving similarly?

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