- Date published:
7:30 am, March 24th, 2016 - 144 comments
Categories: David Farrar, dpf, john key, making shit up, national, spin, the praiseworthy and the pitiful, you couldn't make this shit up - Tags: bradley ambrose, david farrar, flag distraction, ubi, universal basic income
Recent treatment of Labour’s raising the possibility of a Universal Basic Income neatly shows the problem that the progressive movement in New Zealand has with the media. It also shows how captured the media is and how manipulated it is by the right.
As part of Labour’s future of work project the possibility of a UBI has been floated. The rationale is that with the increasing disappearance of long term traditional jobs individuals are going to have to reskill and retrain more often and periods of unemployment are going to become more and more common. A universal basic income could ease the adjustment and allow the retraining to occur without disruption. And if technology is going to automate many existing jobs then we better have a good way to spread the benefits around, otherwise the problems already being caused by inequality are only going to get worse.
So Labour has raised a UBI as something for consideration. It is likely that in some form it will be part of a future policy proposal but clearly a lot more work has to be done particularly on its level and how it is going to be funded.
A discussion paper has been prepared. From the paper:
Almost all individuals discussing a UBI raise the question of whether a UBI will be sufficient to maintain a reasonable standard of living for recipients. Most costed proposals for a UBI suggest that it is feasible and affordable to provide an annual UBI of around $10,000 (Gareth Morgan and Susan Guthrie’s preferred proposal seems to be a UBI of around $11,000, as discussed below at 5.2). There are legitimate doubts about whether this figure is enough for an individual to live on. After all, $11,000 is a lower income than what is currently paid out as part of New Zealand Super. If the figure is too low, then the benefits of security and freedom promised by a UBI may not be realised. On the other hand, if the figure is pushed higher, taxes will have to rise, possibly to an unrealistically high figure. (Morgan’s $11,000 UBI is funded through a flat tax of 30%.) There is, therefore, a real feasibility-sufficiency trade-off. It may be that a UBI has to be supplemented by other transfers to ensure that the most vulnerable groups have enough income.
A couple of models are mentioned. Gareth Morgan’s Big Kahuna is referred to but the concern is that the tax system under his model is not progressive enough. An alternative model retaining more progressive taxation is also mentioned in the discussion paper. No figures are mentioned and clearly the paper is a preliminary analysis.
In fact when you read the paper you realise three things:
Hear that media and John Key and National sock puppets? It is not Labour Party policy, no final decisions have been made yet and the details need to be worked through.
So how have the sock puppets and the media handled this? Well if you are into proper merit based analysis and enjoy a bit of blue sky thinking (scuse the terrible jargon) they should relish the debate. Instead there has been the rush to attack the proposal on the basis:
Ohmigod! $38 billion! That headline sounds massively expensive. But it’s also utterly, hopelessly dishonest.
UBI policies are based on providing everyone a basic income, but reducing welfare entitlement and increasing tax rates on added income to compensate. David Farrar’s $38 billion figure is only true if you provide everyone with a basic income but you make absolutely no changes to either welfare entitlements or tax rates.
That’s like calculating National’s tax switch policy in 2010 was a “four year, $18 billion bribe,” by just excluding the GST rise from the calculations. Ludicrous. Imagine the gnashing of teeth and proclamations of economic illiteracy that would follow if I did that, including from a certain David Farrar.
But then the main stream media chipped in.
In the Herald Larry Williams called the proposal left wing lunacy. He costed the proposal at $20 billion a year, even though he was told and was aware that under any UBI existing social welfare payments would be replaced.
Patrick Smellie in the NBR claimed that Labour had been forced to clarify that a UBI was not party policy. Well it was, but only because two days earlier the NBR had printed Farrar’s misrepresentation of the proposal.
And then John Key got stuck in. This is a difficult week for him with the embarrassment of being declined funding to settle the defamation claim made by Bradley Ambrose and gearing up for the further ignominy of losing the flag referendum so I am sure he enjoyed it. From the Herald:
Mr Key today attacked the idea as “utterly unaffordable” and “barking mad”.
“It is utterly unaffordable and would actually leave a whole lot of people worse off. So there are 3.5 million New Zealanders aged over the age of 18, under Labour’s plan it would cost $38 billion,” Mr Key told reporters.
“Last year I think we collected about $29 billion in taxes anyway, so you would literally have to ramp up taxes enormously … what you would be doing is paying huge amounts of money to those who actually don’t need it, and give less money to the people who really do. I just think as a system it is barking mad.”
Mr Key’s grasp of the country’s finances are of concern. Last financial year the Government collected $66.6 billion in tax, over twice what Key thought.
His grasp of the proposal is also of concern. Repeat after me, it is a proposal for discussion only, it is not Labour Party policy and no final decision has been made.
Update. I hope MS won’t mind if I (r0b) add a couple of links to this excellent post. In terms of media / expert reaction see:
Universal basic income ‘is worth considering’ – economist
The case for a universal basic income (warning autoplay Paul Henry video)
A Universal Basic Income in New Zealand?
Universal Basic Income – how it could work in NZ
Universal Basic Income and Income Tax Reform
The case for universal basic income in New Zealand & worldwide
New Zealanders want to give everyone a ‘citizen’s wage’ and scrap benefits
As to Key’s predictably hysterical reaction, I think Iain Lees-Galloway has that covered:
Meh. Key once said Working for Families is communism by stealth. He's a conservative. He'll catch up one day. https://t.co/h2vHwSjmzb
— Iain Lees-Galloway (@IainLG) March 23, 2016