The future of the British welfare system is a topic of ongoing debate, with much focus on the budgetary costs and labor market participation of benefit recipients. However, Professor Maximilian Kasy from the Department of Economics argues that this debate often lacks clear principles or rigorous evidence regarding alternative policies.
Professor Kasy outlines several principles shared by many economists. He states, "First, coercion, surveillance, or conditionality do not increase the wellbeing of the recipients of benefits. Only by increasing the options effectively available to people can we make them better off." He further emphasizes that forcing benefit recipients into any available job or requiring them to deplete their savings before receiving help leads to economic inefficiency.
He also highlights the importance of normative choices in tax and transfer policy, noting that while one might choose not to prioritize the wellbeing of those with disabilities or out of employment, there is no "objective reason" for such a stance. Additionally, he asserts that important questions about transfer policies' impacts require empirical answers through randomized experiments.
Kasy has been involved in two such experiments: a guaranteed job program for long-term unemployed workers in Austria and a basic income trial in Germany. Both were conducted as randomized controlled trials with independent research teams.
From these experiments, two significant findings emerged. Firstly, both studies showed that individuals are willing to work when given opportunities. In Austria's job guarantee program, all participants accepted jobs offered to them. Similarly, in Germany's basic income trial, there was no decline in employment among recipients compared to a control group.
Secondly, both initiatives significantly improved recipients' wellbeing and mental health. Basic income enhanced autonomy and agency among participants due to reduced surveillance and increased safety net provisions. The job guarantee program provided participants with a sense of purpose and social belonging beyond monetary compensation.
Professor Kasy advocates for moving away from austerity measures towards creating a society offering safety and opportunities for all by modernizing welfare state institutions. He suggests adopting guiding principles such as liberty—improving choices for those worst off without imposing control; equality—ensuring a comprehensive safety net; and solidarity—bearing costs necessary for universal social participation.
In conclusion, while no single policy can address all issues within the welfare system comprehensively, Professor Kasy believes that implementing basic income for everyone alongside guaranteed jobs could pave the way toward an inclusive society providing equal opportunities.