Viewpoint: A Citizens Basic Income? Questions for a New Scotland

Viewpoint: A Citizens Basic Income? Questions for a New Scotland

Ailsa McKay, 1963-2014

Given that social security policy is currently reserved to Westminster, the reform debate in Scotland has been focused on mitigating the impact of measures introduced by the UK government.  However, the constitutional change debate provides an opportunity to consider the options for a distinctive social security system in a new Scotland. In embracing that opportunity, we need to ask what makes a good society and what kind of welfare system would support it? In this article, I make the case for a Citizens Basic Income.

A Citizens Basic Income (CBI) might not be a new idea, but it would require a fundamental rethink of the justifying principles informing state supported income transfers and, as such, it is a radical idea. Throughout Europe, attacks on social security policy have been consistent since at least the early 1980s and have contributed to a withering of employment-related insurance-based benefits in favour of income targeted benefits. In the UK context, within an environment of fiscal restraint, income transfer systems have undergone considerable reform resulting in greater reliance on means testing and targeted benefits rather than universal provision and a general shift in emphasis away from benefits to tax credits.

The concept of a minimum income guarantee paid to all citizens on an individual basis, without means test or work requirement, is simple and appeals to a wide range of political and economic perspectives (see for example Van Parijs, 1992). A CBI would replace all existing income maintenance benefits, including all relief set against income tax liability and the amount paid would be tax-free. The proposal would involve full-scale integration of the tax and benefit system thereby potentially reducing administration costs associated with current structures of delivery and eroding any disincentives to work that can arise from the interaction of separate tax and benefit structures.  A CBI would ensure that the financial gains from paid work were always positive and would provide a more secure base for individuals to opt in and out of the labour market, thus promoting greater flexibility with respect to individual life choices.

In arguing for welfare reform along the lines of a CBI it is generally assumed that the issues being discussed relate exclusively to the reform of social security policy. However, a CBI has the potential to promote individual autonomy and allow for the development of social and economic relationships, negotiated outwith the confines of traditional market oriented transactions.  A CBI provides the basis for creating space to rethink our notions of work, income and citizenship rights within modern capitalist economies. Yet, much of the literature advocating a CBI favours quite traditional work and pay relationships. This significantly reduces the possibilities of a CBI to address longstanding gender inequalities.

The current position of women in Scotland’s economy is a cause for concern at a number of levels and the constitutional futures debate provides a platform for raising and discussing issues relating to gender inequality. Formal social security arrangements have traditionally served men more favourably than women. This is in part due to the direct relationship between insurance-based benefits and the labour market, but is also an indirect consequence of policies that fail to recognize the diverse role of women as wives, mothers, carers and workers.

Despite their changing position in the labour market in recent decades, women continue to assume responsibility for the majority of unpaid household tasks, including care work. Accordingly women are more likely than men to work part-time or have some form of flexible working arrangement.

Women’s position within the labour market is more precarious, primarily because they work flexibly, are more likely to be in temporary or part-time employment and/or are segregated in low-pay sectors and occupations. Women, therefore, are less likely to have built up any savings, resulting in less resilience to weather tough economic conditions and putting them, and their families, at greater risk of increased poverty. Prolonged and deep-seated public spending cuts will impact significantly on women as workers in the public sector but also as users of public services.

Evidence relating to occupational segregation, the gender pay gap and the gendered division of labour within the household indicate that many of our community assets are going unrecognised, in particular the skills and knowledge of our women workers both in the paid and unpaid economies. A CBI may provide a framework to build a welfare system that moves away from that tendency, providing a blueprint for a ‘workable new welfare architecture’ that effectively recognises the totality of women’s contribution to the economy and wider society. The question remaining is – in the new Scotland is there a desire and/or political will to do so?

Within the Scottish context a commitment to the promotion of equality has been a defining feature of the post devolution political and policy frameworks, made explicit via high-level strategy and processes. The Scottish Government’s economic strategy – focused on a single overarching purpose to promote sustainable economic growth – makes explicit a commitment to ensuring opportunities for all citizens to benefit from Scotland’s economic prosperity.

It would appear then that the current political climate within Scotland provides real opportunity to move beyond the confining parameters of mainstream economic analysis in attempts to understand the role of women in the economy. The door is ajar, creating a space for new thinking that more accurately accounts for a whole range of economic activity that is welfare enhancing. In the context of social security policy this open door allows for consideration of the CBI proposal and how it presents as an opportunity for reshaping welfare policy in accordance with a goal of promoting opportunities for all of Scotland’s people.

In rising to this challenge, a number of questions immediately come to mind: How do we go about reconceptualising what we consider to be ‘work’? How do we deal with the free–rider problem when we consider the third party effects resulting from the energy and effort some individuals expend in building local communities and/or staying at home to care for others? How do we deal with the vulnerability of certain groups and the institutions they rely on as a source of economic and social welfare? And how do we manage the social costs associated with increasingly unequal societies? If we continue to rely on and promote welfare schemes that have an overarching purpose to promote paid work exclusively we fail to account for the experience of that work for many vulnerable individuals, including most significantly women.

Finally if we think what, how and who we value in the context of assessing the gendered impact of austerity measures on overall economic performance a further set of questions come to mind. In the context of the recent financial crisis, who was bailed out and why? How was the bailout financed and who will continue to pay the price? Why is the impact primarily on pay and jobs in the public sector? And how can we justify the level and scope of the current public spending cuts evident across Europe?

Policies to encourage private sector investment may lead to positive outcomes in terms of boosting aggregate demand. But this is by no means guaranteed due to the uncertainty and volatility inherent within global financial markets as Keynes so eloquently argued in the 30’s. In accounting for gender difference it may be that we can conclude that the best way to boost aggregate demand is to effectively target resources towards meeting the needs of women and their families. However this would require a fundamental shift in thinking. In particular it would require an acceptance of the centrality, and indeed the superiority, of public sector expenditure and of the care sector in supporting economic and human development.  Perhaps it is time to make that fundamental shift, and to consider a different set of values as the defining feature of our ‘good society’.

The gendered impact of the current economic recession, and subsequent austerity measures, highlights how women are now disproportionately paying the price.  Given that there appears to be no let up in the implementation of austerity measures the conclusion to be drawn perhaps is that this particular gender inequality is a price worth paying?  This question is essentially a question of what do we as a society value? And if we are value greater equality, what are the means by which we will achieve it. Perhaps a CBI can provide us with just the platform we will need.

References

Van Parijs, P. (ed.) (1992) Arguing for Basic Income: Ethical Foundations for a Radical Reform. London and New York: Verso

Ailsa McKay died on March 6th 2014. She was Professor of Economics and Director of the WiSE Centre at Glasgow Caledonian University,. She was a feminist economist and campaigner and a leading authority on gender budget analysis in the UK. She served as a consultant to the Scottish Parliament, the Irish Government, Her Majesty’s Treasury and the United Nations Development Programme. She was an expert advisor to the Scottish Government on the budget process and on childcare and was working persuasively for the introduction of a CBI in Scotland. Her 2005 book The Future of Social Security Policy: Women,Work and A Citizen’s Basic Income, published by Routledge is a feminist critique of the neoclassical economic framework. She will be sorely missed.

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