Citizen's wage – a proposal

[littlebabyjesus]

I'm not talking about people on the minimum wage but about people in a job earning above that. If the State paid them all £100 there would be no need for employers to pay so much. So wages would tend to fall by that amount.

That does not follow at all. Did abolishing the 10p tax band lead to low-paying employers paying more to compensate for the tax-bashing their poor workers were hit with? If so, I'd like you to show evidence of this. It really does not follow.

In my eg, anyone earning £250 + per week will not feel this as 'being paid' £100, but as their personal tax allowance.

Do you object to the libdems' proposal to raise the personal tax allowance to about this level for the same reason? Will that depress the wages of those on just above minimum wage?

 

[Falcon]

There is no reason why all these things cannot continue as they are. Your tax would be worked out as 40% of earnings - £100. Deductions would simply reduce the earnings to be taxed, as now.

I like it. It is very simple - we waste so much money in astronomical administrative costs, and the complexity of the current system makes it leak like a sieve. So stripping all that out leaves a lot more resource from a dwindling supply of money for people who need it.

Means tested, of course, and where it isn't possible to provide work (as is going to be the case when the permanent recession starts to bite) there is going to be lot of community service need, especially around agriculture.

You would have to strengthen the tax base further to make it work, and taxes from the better off are necessary, but not sufficient, to fund it. In general, it is better to tax land than labour, so increase that (I'm not arguing about your upper scale, I'm saying "both/and", not "either/or"). And since energy is running down, and getting more expensive, taxes have to be much more directed at discouraging its consumption. Carbon taxes work because energy generation comes from hydrocarbon. As the biggest source of climate change emissions, it's a double positive. One of the biggest costs is heating, and social housing tends to be better insulated and heated than middle class houses, so it's fairly progressive.

 

[spring-peeper]

(1) In our country, you don't save for your own retirement. Our pension system works on the basis that the current working population pays the current retired population. By moving to Canada, spring-peeper's parents stopped contributing to UK pensioners, but are now being supported by todays workers. The value of the NI contributions they did pay before they left bears no relation to the value of the pension they are withdrawing from the system, and spring-peeper is right.

Sorry about the derail, but - you don't save for your own retirement in the UK???

Here, we have it drilled into us that there won't be enough money for the government to give us much of a pension. We are supposed to save enough to supplement. We get tax incentives to put money away.

I would have thought it would be the same there - your government isn't much better off than ours.

 

[Crispy]

Yeah, the system works when the numbers of workers and retirees is stable, but right now, demographics is imbalancing it. Any current worker who thinks the state pension will be enough to live on in 20 years time has got a nasty shock coming.

 

[littlebabyjesus]

Yeah, the system works when the numbers of workers and retirees is stable, but right now, demographics is imbalancing it. Any current worker who thinks the state pension will be enough to live on in 20 years time has got a nasty shock coming.

This is why the system for funding pensions needs to be totally overhauled, and worked from the other way.

Overall, the GDP of the UK has been on an upward curve for the last half century. The recession has shrunk it considerably, but a return to capitalist growth is on the cards.

So, there is more money per person in the UK than ever before.

So, the problem is not lack of funds, but a fault in the mechanism to distribute those funds. A way to solve that is, in a given year, to take the number of pensioners and work out how much you need to give them all a decent pension. Then you set the tax rate for that year accordingly.

As in my proposal here, you scrap NI and the pretence that we somehow pay for our pensions while we work. We don't. While we work, we pay for the pensions of current pensioners, and when we become pensioners ourselves, our pensions are paid for by those currently in work. There is more wealth to pay for pensions now than there has ever been (allowing for the contraction of the recession).

There is no demographic crisis, and won't be until such a time that GDP per capita starts to fall as a result of the increased pensioners. That time has not arrived.

 

[spring-peeper]

So, there is more money per person in the UK than ever before.

I thought that the UK had a massive debt load due to the bailing out of the banks. Was paying back this debt included in your computations?

 

[Wolveryeti]

As in my proposal here, you scrap NI and the pretence that we somehow pay for our pensions while we work. We don't. While we work, we pay for the pensions of current pensioners, and when we become pensioners ourselves, our pensions are paid for by those currently in work. There is more wealth to pay for pensions now than there has ever been (allowing for the contraction of the recession).

There is no demographic crisis, and won't be until such a time that GDP per capita starts to fall as a result of the increased pensioners. That time has not arrived.

It's not a pretence - it's part of an implicit social contract. People aren't idiots either. They won't swallow having to pay increasingly large tax burdens to support the pensions bill while being aware that once they get to retirement age they'll have fuck-all to live on.

 

[littlebabyjesus]

It's not a pretence - it's part of an implicit social contract. People aren't idiots either. They won't swallow having to pay increasingly large tax burdens to support the pensions bill while being aware that once they get to retirement age they'll have fuck-all to live on.

They will. Otherwise how could they expect others to do the same when their turn comes? There is an implicit social contract, yes, and that is what needs to be changed to reflect more closely what actually happens.

 

[Falcon]

The recession has shrunk it considerably, but a return to capitalist growth is on the cards. So, there is more money per person in the UK than ever before.

LBJ I admire what you are trying here, but this statement is wrong on so many levels it hurts.

There is no GDP growth without oil growth, and oil is shrinking.

The official oil forecasters - the Energy Information Agency in the US - came off the fence last month and admitted in public what experts have knows for a long time --- that there will be a 60% shortfall in oil by 2035. Adding up all the money they know is being spent on new investments to replace the ones running down, we are about 70 million barrels a day short. That's because there are no opportunities, not because there is no money - the oil companies are quietly returning the money to their shareholders.

Repaying the £1 trillion national debt and paying the £250 billion unfunded pension debt depended on on it DOUBLING in that time (the "reference" forecast has already been reduced from the one 5 years ago). There has never been a time when the amount of DEBT per person in the country has been higher (about £25,000 for each man, woman and child currently alive). There is no foreseeable way for repaying it. At all.

The mortality rate in the Soviet Union rose dramatically in the years immediately following its collapse, and remains high today. The "minimum wage" you are discussing here is the minimum necessary to ensure survival. Need to be clear about that.

 

[tbaldwin]

Good thread.
Urban 75 at its best should be about generating and debating ideas. I really like the idea of a citizens wage and think that it could prove to be both widely popular and a really good idea.
the present benefits system needs to be replaced IMO. JSA/ESA etc acts as a disincentive to work and keeps people trapped in poverty. We need a new system that gives a safety net to people but doesnt discourage people from working.

 

[littlebabyjesus]

LBJ I admire what you are trying here, but this statement is wrong on so many levels it hurts.

There is no GDP growth without oil growth, and oil is shrinking.

The official oil forecasters - the Energy Information Agency in the US - came off the fence last month and admitted in public what experts have knows for a long time --- that there will be a 60% shortfall in oil by 2035. Adding up all the money they know is being spent on new investments to replace the ones running down, we are about 70 million barrels a day short. That's because there are no opportunities, not because there is no money - the oil companies are quietly returning the money to their shareholders.

So you replace oil. Investment in research into, for instance, capturing solar energy, which is the most glaringly obvious replacement for oil, is pitiful at the moment. But how much progress could be made if, say, £100 billion per year were invested in such research. Totally doable, not really on much bigger a scale than the Apollo project, and for a much more important cause than putting a man on the Moon.

It took about 8 years of serious investment to put a man on the moon. Do you really doubt that a similar level of investment into renewables, and particularly solar energy(at its peak, the Apollo project employed half a million people), could yield spectacular results. I don't. All that is needed is the political will, which is evidently not there at the moment, but will be eventually. It is not in the interests of those that control capital to see Peak Oil destroy growth, after all.

It would not surprise me if the impetus for this came initially from China. They have the kind of authoritarian system that could initiate such a massive project with a top-down edict. The Chinese are well aware that their increasing reliance on coal is unsustainable long-term.

As George Porter, director of the Royal Institute, said way back in 1973:

If sunbeams were weapons of war, we would have had solar energy centuries ago.

Another prescient quote, this time from Thomas Edison way back in 1931:

We are like tenant farmers chopping down the fence around our house for fuel when we should be using Nature’s inexhaustible sources of energy — Sun, wind and tide. … I’d put my money on the Sun and solar energy. What a source of power! I hope we don’t have to wait until oil and coal run out before we tackle that.

 

[Falcon]

So you replace oil. Investment in research into, for instance, capturing solar energy, which is the most glaringly obvious replacement for oil, is pitiful at the moment.

Oil is the distilled product of millions of years of sunlight captured by millions of acres of forest, processes by millions of Joules of tectonic energy - we stick a hole in the ground and suck.

The incident power of sunlight at the equator at mid day is 1000 watts per square meter of ground. In Britain, correcting for latitude, diurnal variation and weather, it's about 110 watts per square meter. Theoretical conversion efficiency for solar thermal is about 50%, solar PV is 60%. These are gross i.e. neglecting their considerable transducer manufacturing energy requirements. Commercial PV efficiency is still around 20%. US desert power plants produce about 20 watts per square meter annual average. Bavarian solar parks produce about 5 watts per square meter.

A 747 consumes 140,000,000 Watts of power in flight. Work out how many square meters of farmland you need to power 1 transatlantic flight using solar power. Scale that up in your head and figure out how much land you need to power the equivalent of 84 million barrels per day of oil consumption.

Solar biomass ("biofuel") yields about 0.5 Watts per square meter of farmland. Work out how many multiplies of the UK surface area you would need to replace UK surface transport fuel with biofuel (hint: about two UKs). Then google "food riot".

You don't need to spend billions in research to prove what you can calculate: renewable energy sources are so diffuse there is simply no way they can replace hydrocarbon fuel sources. Period.

 

[littlebabyjesus]

Different solutions for different places. How much energy could be produced, for instance, over a vast area such as the Sahara desert? Some energy sources are not so diffuse. A Severn barrier would produce 5% of the UK's energy. It would destroy a lot of important habitats particularly for birds, but it would also create habitats for other birds. What is the potential for solar power stations operating in space and beaming the energy down to us in microwaves?

But these are only the kinds of things that are possible now. We can't even really guess what kinds of solutions could be found with real investment, setting the best minds to the task with the funding to investigate their ideas. I think you're way too pessimistic about the prospects of future research and innovation. It is certainly premature to make your bold statement and put 'period' at the end of it.

 

[Falcon]

Different solutions for different places. How much energy could be produced, for instance, over a vast area such as the Sahara desert? Some energy sources are not so diffuse.

In theory you would need about 1 million square kilometers of solar panels to supply the world's current electricity consumption.

Panels last about 35 years. Say it took you 35 years to construct the array - as soon as you had finished it, you would have to start again. But in 35 years electricity consumption will have doubled (2% per annum compound growth) - so you would need to build 2 million square kilometers. Assume you could service half a km of arrays either side of an access road - you would need to build a road system the size of Canada's just to access the arrays for daily cleaning (they don't work when they get dusty). Just constructing the road system would consume a fifth of the arrays power output. The array would be 1000km on a side -- the electrical transmission losses just getting the power from the interior of the array to the periphery would approach 10-15% of the array's power output. So you would have to build another 100,000 square km array to compensate. But it would (etc. etc.)

You are applying what is called normative forecasting - starting from some ideal future (e.g. "solar panels in space") and working backwards to today. All we can do is contingent extrapolation - start from today and work forward. There are futures that are possible in normative forecasting that are not possible in contingent extrapolation i.e. we can't get there from here.

For example: even if it were possible to build the systems you talk about, we would have to divert an enormous quantity of energy from running daily life into the industrial manufacturing systems to create them. Yet the system crashes when you reduce energy flows by even a small percentage (that was the 2008 crash). There is a reason why they don't change aircraft engines in flight. They can land the aircraft -- we can't land the world while we change its engines, and trying it in flight will crash it.

You talk about "real investment" - we would need trillions of dollars, yet most countries have trillions of unrepayable debt.

I hate to sound depressing, but there is no supply solution here and for as long as we keep fantasising that there might be we avoid taking action on the only thing that will help, which is radical demand destruction and reconfiguration of our society.

 

[littlebabyjesus]

You talk about "real investment" - we would need trillions of dollars, yet most countries have trillions of unrepayable debt.

Debt is a virtual problem, not a real problem.

As to your aircraft analogy, that simply isn't true. Countries switch to war economies, diverting huge resources to war, without crashing the economy.

Here's my prediction: Far from causing increased conflict and war, the coming energy crisis/global warming crisis will cause nations to come together to find solutions to the common problem that they face. Adversity breeds cooperation, not competition. The challenges of the 21st century could well bring people together as never before.

 

[Wolveryeti]

Debt is a virtual problem, not a real problem.

Not true though, is it. If you unilaterally abolish debt, you will cause changes in peoples' behaviour which will have very real effects.

 

[Falcon]

As to your aircraft analogy, that simply isn't true. Countries switch to war economies, diverting huge resources to war, without crashing the economy.

You missed a bit. "... under conditions of an expanding energy supply".

With an expanding energy supply, you can do anything.

We don't have an expanding energy supply.

Here's my prediction: Far from causing increased conflict and war, the coming energy crisis/global warming crisis will cause nations to come together to find solutions to the common problem that they face. Adversity breeds cooperation, not competition. The challenges of the 21st century could well bring people together as never before.

Here's my prediction: when it comes down to the last loaf, you will shoot me rather than let your child starve.