© 1998 Social Policy Agency of the Dept. of Social Welfare.

Michael Goldsmith

I am pleased that David Preston responded to the essays by Keith Rankin and myself in the last issue of this journal and grateful to the editor for allowing me the right of reply. Most of Preston's criticisms are refutable. Let me first deal with two of his final comments on my paper, however, as they potentially have more purchase than the rest:

• It is absolutely true that my paper is "an attempt to explore a philosophic[al] concept of citizenship-based economic rights rather than a practical analysis of... UBI". It never pretended to be anything else and I make no apologies for that. My reasons were two-fold:

1. the essay was explicitly submitted as a companion piece to Keith Rankin's paper which addresses economic issues in spades;
2. I believe that contentious philosophical issues are inevitable in debates over social and economic policy. If citizenship is not a philosophical---and social and political and cultural---issue, I don't know what is. I would also add that there are more things in heaven and earth than are dreamt of in Preston's philosophy.

• The argument that linking eligibility to "notional obligation to pay taxes involves a circularity in terms of non earners" has some merit insofar as registration as a taxpayer conventionally depends on a rigid distinction between those who pay taxes and those who do not; but as UBI implies a system where taxes and benefits will be integrated (see Parker 1989 and Rankin's proposals) some such circularity is inevitable. Nevertheless, I suspect that I did not make myself sufficiently clear. The point is that not only all NZ-born and naturalised citizens, but also all tax residents should be eligible for UBI. In the vast majority of cases, moreover, the latter would pay a net return to the NZ revenue. To counter another of Preston's criticisms, the 'only' thing that would stop 5 billion people queuing up to claim UBI would be an efficient and vigilant Inland Revenue Department coupled to logical tax laws!

The remaining criticisms are relatively minor:

• If the point that UBI is not new was an implied criticism, so what? Good ideas do not have to have come down in the last rain. I take heart in the fact that the idea has been around for many decades, if not centuries. Most UBI proponents are aware of a lineage stretching back at least as far as Tom Paine. I do take issue, however, with the insinuation that "the concept ha[s] moved from the left to the right of the intellectual spectrum". That UBI makes sense to many supposedly right-wing economists is one of its most intriguing features; but it has continued to draw strong support from left and centre. Nor would it be true to say that the concept has only just resurfaced---a large volume of writings by Bill Jordan, Philippe Van Parijs, Robert van der Veen, and others since the early 1980s bears out my point (references are too numerous to mention here but I can provide a bibliography on request).

• Preston's assertion that "North American trials failed to validate the efficacy of the Friedman proposals" is highly misleading. First, the trials studied the effects of negative income tax, not UBI. While the latter may involve something that looks like NIT in practice, it stems from different assumptions and has very different sociological implications. Second, the evaluations of the proposals lent little or no support to the argument that NIT produces negative consequences (see Munnell 1986). The reason for abandoning the experiments seems to had more to do with political difficulties than with whether or not they were effective.

• Preston is probably right to say that "most economists on the market orientated end of the spectrum have distanced themselves from the idea of unconditional income transfers...". If so, it is probably as circular an argument as any he accused me of. Market-orientated theorists place all their faith in the market, so are bound to disagree with anything that intervenes in its "free" operation.

• The main accusation against me is that I appear to "reject the view... that income provision should be linked to a requirement to work or contribute...". True, I do question the necessity of that link but I am reflecting reality when I do so, not imposing some utopian manifesto. Large portions of the New Zealand workforce do not receive direct payment for the work that they do; many New Zealanders of working age do receive large incomes for no significant work effort. UBI addresses the inequities of the former situation, in particular. Note, too, that UBI allows people to receive wages from paid work, inheritance or investment on top of the basic income. The more they do so (and most people will), the more the state recoups in terms of their tax contributions.

• Preston leaps at my provocative reference to surfing as one of the important things that unwaged people do, along with caring for dependants and doing 'voluntary' work. I admit the point was slightly tongue-in-cheek but in fact it has become an important litmus test in the literature. Philippe Van Parijs (1991) argues that the single most important asset most members of an advanced capitalist society will ever have or aspire to is not a house or a car... but a well paid and secure job. Since this is an increasingly scarce commodity, those of us who possess one should actually feel grateful to those who withdraw from the elite labour market and are either willing to subsist on a UBI or to supplement it with other income.

• The details of the need-to-raise-tax argument I will leave to Keith Rankin to negotiate in his response. Nevertheless, I thoroughly agree with his starting point that taxation is not theft but, rather, a way of recognising that individual wealth is due in large measure to the 'public domain'. Higher taxes are therefore not necessarily a bad thing in and of themselves.

Links | | UBINZ | | GeoCities