Speenhamland, automation, and Basic Income: A response.
| Author | Torry, Malcolm |
In our last issue, Frederick Pitts, Lorena Lombardozzi and Neil Warner criticised the idea of a Basic Income on the grounds that it might function as a depressive subsidy to low wages. Here a leading advocate responds with the argument that Basic Income functions differently to a simple wage subsidy.
In the final edition of Renewal for 2017 (issue 25.3-4), Frederick Pitts, Lorena Lombardozzi and Neil Warner suggest that the experience of the Speenhamland reforms of 1795 were 'an experiment in a kind of basic income'. (1)
It was not. It was an extension of poor relief to the working poor. The supplements paid out of the rates guaranteed a net income. They were definitely not a 'Basic Income'. The difference is crucial. A guaranteed minimum income is a minimum income level below which a household's income is not allowed to fall, and the payment made is designed to bring a household's net income up to the specified level. The modern equivalents are Working Tax Credits and so-called Universal Credit. In Speenhamland the supplement paid out was designed to fill the gap between the worker's earnings and a specified minimum income that was related to the size of the family and to the price of bread. The supplement was a means-tested benefit.
A Basic Income is entirely different. It is an equal payment to every individual of the same age. The difference is clear. The Speenhamland payments fell if earnings rose, and rose if earnings fell. A Basic Income remains the same whatever the individual's earnings. This means that the effects are very different. The Speenhamland supplement functioned as a dynamic subsidy. It rose if wages fell, so employers who cut wages knew that the supplement would make up for the wage cut. A Basic Income would be a static subsidy: that is, it would not rise if wages fell, so both employers and employees would know that if wages fell then employees' families would be worse off. Both collective bargaining and the National Living Wage would be even more important than they are now, and the effort to maintain them would intensify.
Another difference relates to employment incentive. Within the communities that were paying the Speenhamland supplement, for a large family with a single low-wage breadwinner there was no financial advantage to seeking increased wages, or to seeking a better-paying job, or to seeking additional skills. Increased wages would mean a lower supplement. But because a Basic Income would never change...
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