Basic income and managerialist mentality

That blogging master of the so-called dismal science Chris Dillow today raises a number of policy issues facing Britain that could, if the Labour Party so chooses, help provide a relatively calm course through stormy economic waters ahead.

As is usual with politicians whose backs are against the wall, our current political leaders are responding entirely reactively to events. They defend their decisions not because they are good ones, but simply because they are theirs. This is related to “Bayesian conservatism”, where the tendency is to stick to prejudices in the face of contrary evidence.

Now I wouldn’t dare discuss economics with Dillow on his own terms as I do not have the background knowledge and expertise required. But Dillow is surely right when he says that that governments can borrow at rates far lower than can the private sector.

That being so, major infrastructural investment may be called for right now. For too long has UK economic success been built on quicksand. The whole thing appears dangerously unbalanced, and it’s a bit much for British politicians to sneer at certain Eurozone counterparts who are prepared to trade a small amount of economic growth for increased stability. I’d much rather be living in, say, Germany or Denmark during a credit crunch than dear old Blighty. But I’m not, and am therefore feeling a little nervous about the future. One of the first industries to nosedive in an economic recession is the media.

Dillow attacks Gordon Brown’s beloved tax credits as a legacy of the 1990s. Better termed “means-tested benefits”, tax credits are extremely costly to administer and absurdly complex in nature. A simpler welfare system would be preferable, and some kind of basic income scheme (e.g., Milton Friedman’s “negative income tax”) is an obvious choice. It certainly wouldn’t be cheap, and if we were to organise our welfare system along such lines, income tax rates might assume levels typical of Scandinavian countries. But the high costs incurred would go into supporting people rather than bureaucracy.

The cynic in me says that complexity is the deal-breaker here, not cost. Basic income ideas have been around for a long time, but they have never been accepted by politicians who for whatever reason will not slacken the reins and allow civil society to develop free of government interference. The managerialist impulse is too strong. Another problem is that the labour market in a society with a guaranteed basic income would be worker, family and local community-led. Heaven forfend!

Basic income would no doubt allow the tiny minority of terminally indolent to watch daytime TV in their jim-jams, free of hassle from the dole office. But it could at the same time let loose the creative potential of millions, and restructure the economy on a more human, needs-first basis. That is certainly an idealistic vision, but I make no apology for this. Where are the big ideas in our nominally socialist Labour government? Where is the vision?