Imagine this …

The banking crisis has happened. The government – and this could be any government – has bailed out the banks, so there is less to spend on public services. Jobs are not as secure as they were. People without jobs are struggling to get back into work, and people with jobs are worrying that soon they might not have them. People are still spending, and they are getting into debt; or they are not spending, and they are just about getting by.

There is at least one good piece of news: inflation is low – so the government decides that it can print some extra money without creating the high inflation which that would cause in more normal times. Let us imagine that instead of giving the money to the banks, which created the crisis, the government gives an equal weekly income to every citizen: a Citizen's Income. Citizens might spend it on goods and services, thus creating employment; or they might save it, making lending and investment possible.

As the economy picks up, inflation starts to rise, and so the government decides that it can no longer print money. We have got used to receiving a Citizen's Income, so the government reduces personal tax allowances and most means-tested and National Insurance benefits so that it can continue to pay equal amounts of money to everyone. Because the universal payment is worth the same as the tax allowance used to be worth, and is similar to what means-tested and social insurance benefits used to be worth, few people's disposable incomes change very much. But now things are different. People who had been on means-tested benefits are now on lower amounts of them, so lots of them decide that they have had enough of bureaucratic interference in their lives and they come off benefits and look for work. Often a part-time job will be enough to top up their Citizen's Income; or perhaps part-time work and a bit of self-employment. Starting a business looks more attractive than it once did: after all, nobody is going to take away their Citizen's Income, so they will always have that to rely on.