Tuesday, 29 January 2013

GDP-anxiety: A solution

One of the increasing lines of attack against people claiming benefits seems to be that some people are getting "something for nothing", more help than "hard working families" and perhaps the time might be right for an incoming Labour government in 2015, to introduce the the Citizen's Income.  Cheaper to implement than means tested benefits, it removes the stigma and damage to someone's psychological health often associated with being a "benefit claimant", and no-one is getting something other families don't have - it's a completely fair system.  It's said that the three main parties all accept that at some point in the future, the Citizen's Income will be introduced, if for no other reason than it's just more cost effective than the enormous administration which always goes along with a benefits system.  The Green Party actively supports it now and maybe the next Labour government, if elected with a clear majority, should have the courage to be more progressive on "welfare" than New Labour was prepared to be.


This article taken from: Citizen's Income Trust blog

The quarterly growth figures published today by the Office of National Statistics show that the UK economy shrank by 0.3%. This quarterly publication has become a moment of anxiety for many in the UK's current economic climate. No new money in the economy (and even a bit less old money) could mean less demand for goods and services, which in turn means less productivity and fewer jobs being created, which in turn means more people with less income on which to subsist, which further reduces demand, beginning the cycle once again. This is at least the perception of the fate of an economy where GDP is the predominant measure of prosperity.

Of course GDP is important. But so are perceptions. What if there was a way to buffer this quarterly solicitude? A way to stand back from it without fear of impending unrest and precariousness for ever larger sections of the population?

One way to do this would be to make sure that everyone's basic financial needs were met from the start. An unconditional Citizen's Income would achieve this. It would mean that every citizen would create a modest but guaranteed level of demand in the economy. There would also be no unpredictable strain on the benefits system as people fell in and out of work. Whether employment figures or GDP figures rose or fell, the benefits bill would remain the same. In fact, productivity would be linked to the rise and fall of GDP to a lesser extent. With an unconditional Citizen's Income people could choose to be productive in their own right, whether for financial reward or otherwise, without having to rely on capacity being created in the economy to allow them to do so.

This would be a solid foundation on which to stand back and decide which parts of the economy it may be useful to grow, rather than merely pushing a growth agenda for its own sake. There is no proof that a Citizen's Income would affect GDP positively or negatively, but GDP would certainly matter less if all citizens could remain in relative stability in the face of economic volatility. A Citizen's Income need not cost more than our current benefits system and would remain at a constant level despite fluctuations in economic growth. This would give the government one less thing to worry about every three months.

Nicholas Torry

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