Financing basic income

by Chris Bertram on July 24, 2003

The new issue of Prospect includes a rather meandering piece by Samuel Brittan on baby bonds, basic income and asset redistribution. A central issue in this area is how to finance such proposals, and that’s something Brittan gets down to at the end of his article. He canvasses Henry George-style proposals for land taxation and also mentions inheritance taxes, but finally comes up with a somewhat odd suggestion:

… a very simple practical proposal, why not auction planning permission? Many local authorities have approached this piecemeal by making such permission conditional on the provision of local services such as leisure centres, approach roads and so on. But why not return this windfall to the taxpayer in the form of asset distribution and let citizens decide how to spend it?

An intruiging idea, certainly, but a great deal of UK planning law would need to change to implement it. For one thing, under the current system, more than one person or body can hold a valid permission to develop the same land. I can even apply for permission to demolish your house, though having planning permission to do so doesn’t entitle me to knock it down! Presumably, also, there would have to be some specific thing that was being auctioned: but planning permissions are specific to the purposes that the applicant intends. You want to build a cinema and I want to build a supermarket: you aren’t interested in my permission and I’m not interested in yours. And giving citizens assets as a result of such auctions doesn’t solve the problems that “planning gain” is usually used to address: your proposed superstore will generate more traffic, so we get you to pay to improve the roads, thereby covering costs which would otherwise fall to the local taxpayer. Still, there may be a workable idea here, but I can’t quite see it.



dsquared 07.24.03 at 6:29 pm

I always find baby bonds a fascinating subject; they seem so obviously sensible that I’m sure there’s a catch.


David Sucher 07.24.03 at 11:56 pm

Paying for specific planning entitlements is really not such an odd idea, and that’s putting aside the context of illegal payments and corruption — a cliche of the land use process.

For one thing, developers are in fact already doing so in the form of zoning and then “exactions.” You want to build a 5-story building next to a 2-story house (there are many examples of abrupt zone edges) — OK. But we want you to step back the 4th & 5th stories in ziggurat fashion. And maybe you also ought to be building a new traffic light…etc etc

Moreover, there is a degree of rough justice: you cause an impact, you pay.
It’s also perfectly legal and not uncommon for a developer to sign a no-litigation agreement with angry neighbors.

Making “Payment for Permit” a more explict and aboveboard process is intriguing, if unlikely to happen — unless Judge Posner (of “Economics of Law” fame) becomes national land use czar.


Chris Bertram 07.25.03 at 7:29 am

David, that sort of payment, referred to in my remarks as “planning gain” is pretty commonplace with big developements in the UK and perfectly legal. Brittan is suggesting replacing it with an auction system so as to derive a fund of assets for redistribution.


derrida derider 07.25.03 at 8:54 am

I’ve always thought proponents of baby bonds just haven’t thought the idea through:

1) If you want people to get a grant at 18, why not just run a budget surplus to put a future government in a position to do it directly?
2) If you did do a baby bond, I’d bet pounds to peanuts that some cash-strapped future government will just appropriate it by imposing uni fees or other imposts that they would not otherwise have been able to.
3) Are you going to let those who’ve improvidently blown their money in a drunken 18th birthday party starve when they later become unemployed or disabled? If so you’re going to have to tolerate more, not less, indigents. If not, where’s the incentive for prudence beyond what already exists?


David Sucher 07.25.03 at 11:00 am

Chris. I guess I am not clear on why “[a] central issue in this area is how to finance such proposals,”

It seems as if there are two unrelated and very interesting issues:
1. Should we have “baby bonds?” (We in the USA have periodically had proposals for a “Guaranteed Annual Income” which sound very similar as a way of enabling “stake-holding.”)
2. Should we explicitly “sell” zoning entitelemnts”?

I think I understand the land-use concept Brittain was advancing and I ‘m merely saying that while it sounds odd, it merely turns the old saw about “buying zoning rights” on its head and says “Yes, that’s what we are doling and we are doing it out front.”

I think the comment above about governments of the future appropriating Baby Bond money for other uses neatly sums up the real world separation of the issues.

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