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|Leading Economist Geoff Crocker Challenges Chancellor’s Welfare Cuts with Basic Income theory|
|Wednesday, 25 November 2015|
The noted UK economist Geoff Crocker has challenged the Chancellor’s unpopular austerity measures in a new paper which suggests a Basic Income approach is the only way to effectively manage the current UK deficit. Calling the Chancellor’s planned welfare cuts ‘defective’ on three levels, Crocker’s Basic Income theory is detailed in depth in his latest paper, ‘The Economic Necessity of Basic Income’, published by the Centre for Welfare Reform.
Crocker says the welfare cuts – which are expected to leave the country’s worst off in an ever more precarious position as benefits such as tax credits are slashed – are technically, practically and morally incorrect.
He says, “The burden of these welfare cuts will fall unequally on lower income earners and families. The distribution of the national income will yet again be skewed in favour of the rich and against the poor.
“The Chancellor fundamentally believes that the government budget can be balanced, or even run in surplus. Facts prove him wrong. He has been unable to eliminate the deficit. He will not be able to eliminate it. In modern high technology, high productivity economies, deficit is inevitable, and manageable.
“In seeking to eliminate deficit and balance the budget, the Chancellor feels forced to either increase taxation, or reduce spending. He has largely chosen the latter, and proposes a £multi-billion reduction in welfare spending. This will feed straight through to an equally large reduction in demand in the economy. This is the last thing the economy needs, since deficient demand continues to be the problem, as output growth exceeds wage growth in economies with increasingly automated production.”
Crocker’s Basic Income proposition relies on a radical triangle which challenges the traditional notion that the 2007 economic crisis was due to greedy bankers and incompetent governments. He asserts that technology-led growth in productivity exceeds real wage growth, which in turn leads to deficient macroeconomic demand. It is this deficient macroeconomic demand that led to the crisis. He says, “Money is virtual, needing to be supported only by output GDP. Deficits are inevitable and manageable in advanced technology economies.”
Crocker’s Basic Income theory paper calls for a new paradigm. It demonstrates that current economic systems are actually creating the current economic crisis and that the use of a basic income would help put the country back onto a better path.
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