Would A Citizen’s Income Be Inflationary?

[Pezerinno]

I’m currently reading a book which momentarily mentions C.H. Douglas and his idea of a citizen’s income (which has been debated on here before) but I don’t fully understand this bit ‘Since this money (debt free created by government) would be distributed direct to consumers, it would bypass industry and hence not raise costs; it would boost purchasing power without raising prices, and thus counter inflation and the generation of debt.’ But I thought an increase in money would reduce purchasing power? Am I missing something obvious? Thanks.

[porca misèria]

I’m currently reading a book which momentarily mentions C.H. Douglas and his idea of a citizen’s income (which has been debated on here before) but I don’t fully understand this bit ‘Since this money (debt free created by government) would be distributed direct to consumers, it would bypass industry and hence not raise costs; it would boost purchasing power without raising prices, and thus counter inflation and the generation of debt.’ But I thought an increase in money would reduce purchasing power? Am I missing something obvious? Thanks.

If you print it, it's inflationary.

If instead of that, it replaces benefits and tax allowances, it isn't.

AIUI the argument against it is that it would be too expensive. The cynic's real reasons include the fact that a more transparent system would be much harder to corrupt, and would be simpler to administer (hence, fewer "jobs for the boys").

I'm in favour of a system that removes the poverty and benefits traps (where you lose more in benefits than you make in earnings). Make work *always* pay better than benefits, and you'll get a lot more people working, to the benefit of the economy as a whole.

[Pezerinno]

If you print it, it's inflationary.

If instead of that, it replaces benefits and tax allowances, it isn't.

AIUI the argument against it is that it would be too expensive. The cynic's real reasons include the fact that a more transparent system would be much harder to corrupt, and would be simpler to administer (hence, fewer "jobs for the boys").

I'm in favour of a system that removes the poverty and benefits traps (where you lose more in benefits than you make in earnings). Make work *always* pay better than benefits, and you'll get a lot more people working, to the benefit of the economy as a whole.

'The basic (citizen’s) income would consist of a supply of money created by the government, free of debt, carefully calculated to offset the debt generated by the banking system.' So I assume it isn't from tax and therefore would be inflationary despite him saying otherwise?

[Guest BoomBoomCrash]

A Citizen's income would not be inflationary if it was linked to GDP, which is how the proposed CI system suggest would work.

[Pindar]

The answer is not a universal citizens income, it's a shorter working week and a low cost economy.

When you've built your infrastructure (as most developed countries have), you only need to maintain essentials such as food and energy. If everybody has somewhere to live, the latter two things are the only things that actually cost.

You can spread the work about to everybody and we can sustain ourselves with the essentials.

The most important things in a post-consumerist society are social care, healthcare, food and energy. There's no reason these things can't be provided by the native population.

[mfp123]

I’m currently reading a book which momentarily mentions C.H. Douglas and his idea of a citizen’s income (which has been debated on here before) but I don’t fully understand this bit ‘Since this money (debt free created by government) would be distributed direct to consumers, it would bypass industry and hence not raise costs; it would boost purchasing power without raising prices, and thus counter inflation and the generation of debt.’ But I thought an increase in money would reduce purchasing power? Am I missing something obvious? Thanks.

isnt the citizens income a bit stupid. you tax every citizen and then give it back to them.

Edited August 2, 2009 by mfp123

[Guest BoomBoomCrash]

isnt the citizens income a bit stupid. you tax every citizen and then give it back to them.

It's a less stupid system than what we have now.

[Minos]

The main problem you are going to have with a citizen's income is that I ain't paying for it.

[mfp123]

It's a less stupid system than what we have now.

yeh but whats the difference.

if a high earner is contributing a higher degree of tax towards the citizens income why would he need some of it back.

why not just say low earners pay less tax, high earners pay more.

why would high earners want to pay tax and get their same money back again.

if youre right in the middle, you pay citizens tax and get the same amount back again.

pointless.

Edited August 2, 2009 by mfp123

[Injin]

isnt the citizens income a bit stupid. you tax every citizen and then give it back to them.

The idea in C.H. Douglas model is to redistribute from those who have profited from transaction costs that actually add nothing to production.

So the OP's question is kind of incomplete, because the proposition is made inside a much larger model where the goal is to equalise wages and production so they are as equal as possible, and rentier payments are as reduced as far as is possible.

[Guest BoomBoomCrash]

yeh but whats the difference.

if a high earner is contributing a higher degree of tax towards the citizens income why would he need some of it back.

why not just say low earners pay less tax, high earners pay more.

why would high earners want to pay tax and get their same money back again.

if youre right in the middle, you pay citizens tax and get the same amount back again.

pointless.

A citizen's income also recognises that technological developments lessen the requirement for human toil. Technology destroys more jobs than it creates, and as a soceity we need to acknowledge this phenomenon.

[mfp123]

A citizen's income also recognises that technological developments lessen the requirement for human toil. Technology destroys more jobs than it creates, and as a soceity we need to acknowledge this phenomenon.

no but i mean from a technical perspective. what does it actually do? after all, its funded by citizens via another tax.

assuming the average citizens income is £1000.

a low earner contributes £500, and receives £1000.

a middle earner contributes £1000 and receives £1000.

a higher earner contributes £1500 and receives £1000.

when not just tax the high earner £500 and distribute it to the low earner.

the middle earner and high earner get nothing. theres no need for them to pay tax and get it back again.

Edited August 2, 2009 by mfp123

[Guest BoomBoomCrash]

no but i mean from a technical perspective. what does it actually do? after all its funded by citizens via another tax.

assuming the average citizens income is £1000.

a low earner contributes £500, and receives £1000.

a middle earner contributes £1000 and receives £1000.

a higher earner contributes £1500 and receives £1000.

when not just tax the high earner £500 and distribute it to the low earner.

so the middle earner and high earner get nothing.

You have it totally wrong. This is how it would work.

Citizen's income entitlement = £10k per annum

So everyone of age is entitled to a sum of money on which they could live. This means we do away with...

Unemployment benefits

State pension

And people are provided woith an incentive to work as what they earn goes on top of their CI (assuming they claim it).

[mfp123]

You have it totally wrong. This is how it would work.

Citizen's income entitlement = £10k per annum

So everyone of age is entitled to a sum of money on which they could live. This means we do away with...

Unemployment benefits

State pension

And people are provided woith an incentive to work as what they earn goes on top of their CI (assuming they claim it).

but its funded by tax.

surely your missing the key principle that the citizens income needs to come from the taxation of the citizen. you can only pay everyone 10k citizens income if you tax everyone, on average, 10k.

by saying citizens income will be 10k all youve done is add another zero on the end of the example.

Edited August 2, 2009 by mfp123

[weebag]

The idea in C.H. Douglas model is to redistribute from those who have profited from transaction costs that actually add nothing to production.

So the OP's question is kind of incomplete, because the proposition is made inside a much larger model where the goal is to equalise wages and production so they are as equal as possible, and rentier payments are as reduced as far as is possible.

Injin - I must congratulate you on making a post that doesnt include the words. fact, valid, fraud, violence, guns, kidnap.

Well done. Surely this is a first in 20,000 posts. Keep it up will you old boy?

[Guest BoomBoomCrash]

but its funded by tax.

surely your missing the key principle that the citizens income needs to come from the taxation of the citizen. you can only pay everyone 10k citizens income if you tax everyone, on average, 10k.

by saying citizens income will be 10k all youve done is add another zero on the end of the example.

Sure 'on average'. It may come as a surprise to you that a 10k per annum CI could be provided right now with no additional taxation required. Indeed I did the math and there would actually be a significant saving due to massive amounts of inefficient pen pushing we could do away with.

[DabHand]

Yes 10k for everyone, its not about redistribution of wealth (although l would advocate no tax for anyone under 20k and offset higher tax on high earners), its about removing the government from the levers of power and interference i.e. removing all their spending money and giving back to individuals to buy their own services/social insurances.

[mfp123]

Sure 'on average'. It may come as a surprise to you that a 10k per annum CI could be provided right now with no additional taxation required. Indeed I did the math and there would actually be a significant saving due to massive amounts of inefficient pen pushing we could do away with.

what are you talking about. the citizens income needs to come from tax.

tax is just a redistribution of wealth.

the point im getting at is that if i contribute more than the average person e.g £15,000. theres no need for me to pay £15,000 and get £10,000 back. just tax me £5000.

[Injin]

Injin - I must congratulate you on making a post that doesnt include the words. fact, valid, fraud, violence, guns, kidnap.

Well done. Surely this is a first in 20,000 posts. Keep it up will you old boy?

Does it count if I quote you?

[porca misèria]

OK, here are some simple figures. I remember them vividly from my first job after graduating. This was a middling salary at the time (£6660); some professional graduate salaries were quite a lot lower.

Person 1: working. Gross salary, £130 per week. Of that, tax £50, Rent £55, leaving £25 to live on.

Person 2: not working: Housing benefit £130/week[1], Income support £25/week.

So already, we have no financial incentive to work.

Now add in all the extra benefits for non-working person. No commuting or working-lunch cost. Free NHS treatment. UB40 card entitling them to cheap or free entry to all kinds of places and events, membership of clubs and societies. Etcetera.

That's just one example of what's wrong with the current system.

My flavour of citizens income would ensure that your effective tax rate: namely, the tax you pay plus the benefits you lose, should never exceed the standard rate of income tax. So on £130/week earned income at today's rates, you'd be £87/week better-off than someone not working at all - less only basic costs like commuting and your lunchtime sandwich.

If you want to call that base which you build on a citizen's income, then I'm in favour.

[1] It was in the news: Mrs Thatcher had just reduced the housing benefit you could claim before they started asking questions to £130/week for a single person.

[weebag]

Does it count if I quote you?

Fkcu me, a sense of humour too!

Maybe you are not the weirdo I had you down for?

[Pezerinno]

The idea in C.H. Douglas model is to redistribute from those who have profited from transaction costs that actually add nothing to production.

So the OP's question is kind of incomplete, because the proposition is made inside a much larger model where the goal is to equalise wages and production so they are as equal as possible, and rentier payments are as reduced as far as is possible.

Thanks Injin. I would ask you to explain it further but as usual this thread is had already turned in to a slagging match so I will look it up on my own.

[DementedTuna]

Injin - I must congratulate you on making a post that doesnt include the words. fact, valid, fraud, violence, guns, kidnap.

Well done. Surely this is a first in 20,000 posts. Keep it up will you old boy?

You forgot "exist".

[snowflux]

no but i mean from a technical perspective. what does it actually do? after all, its funded by citizens via another tax.

assuming the average citizens income is £1000.

a low earner contributes £500, and receives £1000.

a middle earner contributes £1000 and receives £1000.

a higher earner contributes £1500 and receives £1000.

when not just tax the high earner £500 and distribute it to the low earner.

the middle earner and high earner get nothing. theres no need for them to pay tax and get it back again.

The difference is that with a CI, you don't need to know what everyone earns. Far simpler to administer and far more efficient that the current benefits nightmare.

[Pezerinno]

You should be thinking the exact opposite: cutting transfer payments, cutting taxes, and shrinking

the size of government.

I'm all for that but there are still some other issues that need to be addressed.