ABSTRACTpavlina-tcherneva.net
The present article offers three critiques of the universal basic income guarantee (BIG) proposal discussed by Standing in this volume. First, there is a fundamental tension between the way income in a monetary production economy is generated, the manner in which BIG wishes to redistribute it, and the subsequent negative impact of this redistribution on the process of income generation itself. The BIG policy is dependent for its existence on the very system it wishes to undermine. Second, the macroeconomic effects of BIG on contemporary economies that use modern money are destabilizing. The job guarantee (JG), by contrast, stabilizes both the macroeconomy and the currency while helping transform the nature of work itself. Finally, the employment safety-net in Standing's piece is not an accurate representation of the modern JG proposals – a confusion which this paper aims to remedy.
The Job Guarantee: Delivering the benefits that Basic Income only promises: A Response to Guy Standing
Pavlina R. Tcherneva | Assistant Professor, Bard College
3spoken
25 comments:
or 2) by hyperinflating the government fiat currency. PRT
Not if the government-backed credit cartel was abolished first, I'd bet. Then the banks and the so-called "creditworthy" would not be able to front-run the new fiat by, say, commodity speculation with new money lent into existence ("credit") and thus requiring that even more fiat be created and so forth in an inflationary spiral.
But I forget that for many the existence of the government-backed usury for stolen purchasing power cartel IS A GIVEN to which all must bow even the monetary sovereign's ability to deficit spend without triggering price inflation.
I guess this is the formal rationalization of Wray's assertion that if we had a BIG, then everybody would sit around smoking pot all day....
"Alternatively, if the funding were to come directly from government spending by
fiat, the program will be inflationary and possibly hyperinflationary (more below, see also
Tcherneva and Wray 2005b; Tcherneva 2006). This point is yet to be addressed by BIG
advocates."
Ok I guess Warren is wrong then about the source of so-called inflation... ie govt "ratification" of prices...
Because if Warren is correct, then all govt has to do to prevent inflation is be careful about what price it directly pays for things, and what price it allows it's banks to use as the collateral value for loans that they make... and "inflation" so-called wont be a problem...
MMT 101.
"In either case, the financing of BIG relies on debasing the currency..."
They're debasing! ...(Did Schiff ghost write this for her??)
". The first effect of such a policy would be a mass exodus
from those ‘bad’ jobs"
This is the crux of her argument, that there are so-called "bad jobs" out there that nobody would do if they had access to a BIG...
What are these jobs?
Can she name them?
And can she prove that the people currently doing them would not do them for a pay cut if they had a BIG?
This is borderline (perhaps beyond) elitist propaganda...
Maybe if we had a BIG, macro-economists would all quit their jobs and go around smoking pot all day ... now there is an idea...
"This is the crux of her argument, that there are so-called "bad jobs" out there"
"Bad jobs"? Maybe if there are nasty jobs no one wants to do we should pay enough for them to induce them to do so instead of resorting to blackmail...do it for nothing or we'll starve you.
The garbage man is worth every penny we pay him...in fact we should pay him a lot more. Unfortunately he does the shit work and someone else gets rich.
Paul exactly...
How would you like to be an M.D. and perform colonoscopies for $8/hr?
An EMT responding to serious vehicle accidents with much human carnage for 8/hr?
We dont even need lavatory attendants if we design those facilities to be automatically cleaning/sanitizing...
etc...
this is pure propaganda from PT here ... sad to see this here but I guess this is the "New Economic Thinking" so-called...
The preference between BIG or JG seems to be mostly 'philosophical', political (JG will naturally increase the size of the government and indirect jobs it creates, and consume more resources for public purpose, it's not as easy as paying someone to do 'random' stuff, it all takes organization, coordination and resources) and subjective, there is no compelling 'economic' arguments in favour of any of those two.
The preference of JG instead of BIG is built upon a series of assumptions with little empirical evidence. In fact, a lot of them are outright wrong. Maybe in good ol' USA the concept of BIG sounds like 'communism' but in socialist Europe (despite the neoliberal authorities in the EU institutions) there has been BIG of sort in a lot of countries, none of these programs have EVER undermined the institution of 'work' neither the ethic of work (the lack of faith in human beings from some MMT'ers is sad), sure there will be always be some friction but the majority won't behave in a 'morally inadequate way' (whatever you want to think about it). The problem is more cultural than anything else, and different structures are not going to change that culture.
But neither have basically fixed a lot of the problems derived from paid labour (a modern form of slavery anyway, first said by the classics), whatever extra economic benefits it has (price anchor) are no different from a JG (and vice versa).
BIG is AS inflationary as JG, if anything, it could be even LESS inflationary. You acquire currency in a BIG per fixed period of time, even if it's per doing zero job. Work by itself does not give currency value, is supply and demand and subjective preference which create economic relations and 'back-up' the currency with activity (digging holes in the ground does not give currency value). When we implement some sort of ' social safety net', we are accepting that our society is productive enough to systematically spare some 'efficiency' and resources to back up people who unfortunately has fallen unemployed. We don't implement it to create value, but we create it BECAUSE we have enough value (and lack jobs because market inefficiencies, sticky prices, inelasticity etc.) to support it. Economically, it does not change if you give this money for digging holes or for doing nothing.
BTW work can be negative, the value of the output produced would be zero under free market conditions and you would consume energy and resources in the effort (this in fact negative work). JG (and BIG probably too) would be the first target if inflation was ever rising.
All that said, I still think JG is just a patch, it won't fix a lot of the problems labour (most of the population, whatever income bracket they are in, even executives are labour and a lot of them are realizing right now) has. It may be a price floor and a source of aggregate demand (generating purchasing power when unemployment increases), but it won't solve private BoP problems (incomes/expenditures; assets/liabilities), structural work problems (increasing productivity), individual value added and different personl qualities. Is just the same old way of ever increasing burocracy (private or public) to keep a dated system from evolving we have been implementing in the last century. And to make it start working half-efficiently it would probably take a large expansion of the public sector, that's probably one of the reasons developed and efficient nations have it easier to implement some sort of BIG rather than a JG.
P.S: A combined approach could be probably made, and would work better. And you would be surprised how for little more incentives people takes JG over BIG.
JG already exist under the name of 'military, too.
I see that the paper comments on an universal BIG, regardless of the employment status.
An universal BIG serves no purpose as only increases price levels, I don't see how this can be considered an economic policy at all and this I wouldn't support (it would just dilute purchasing power of everyone but specially the people which would be only on BIG and no additional income). And yes it could potentially start an inflation spiral (could, not necessarily, but is a factor).
I was talking about a BIG for unemployed people in my post.
"And can she prove that the people currently doing them would not do them for a pay cut if they had a BIG?
This is borderline (perhaps beyond) elitist propaganda..."
What a BIG would do is force capitalist to increase the wages for these jobs no one wants to do. Instead of forcing them into other jobs they probably do not want to do (this is sad).
BTW I agree with your sentiments, being against BIG and in favour of a JG seems to be a matter of subjective and political preference, no about objective reasoning. We are stuck with the same mind frame of the XIX century...
BTW work can be negative, the value of the output produced would be zero under free market conditions and you would consume energy and resources in the effort (this in fact negative work). Ignacio
Well said! Not to mention the negative impact on morale of people being paid to waste their time.
Also, people receiving a BIG could do all sorts of work that was meaningful to them especially IF they had other resources such as land to work with. So in addition to a BIG, we might also need land reform. That way, many could return to family farming and/or open small businesses.
JG does not exist under the name of "military." JG guarantees a job to even the most unskilled, while becoming a member of the American military is an extremely difficult task.
Ok I guess Warren is wrong then about the source of so-called inflation... ie govt "ratification" of prices...
Perhaps on the grounds that the government is paying something for nothing.
But I think that Ignacio is correct in thinking that is about a universal BIG, which just increases prices assuming everyone spends the "free money."
The MMT economists don't rule out a combo JG/BIG and some prefer it. I think the outcome has to do with the specifics of the design.
". The first effect of such a policy would be a mass exodus
from those ‘bad’ jobs"
This is the crux of her argument, that there are so-called "bad jobs" out there that nobody would do if they had access to a BIG...
What are these jobs?
I think that a lot of people doing "slave labor" now in closely managed situations where "efficiency" is everything would opt out if there were a BIG, unless the wages for those jobs were raised.
Farm work already constitutes jobs that Americans won't take at the wages offered, which is why we have an "Immigration problem." Same with meat-packing and other such undesirable low-skill low-wage work.
What a JG or BIG should do is raise the minimum wage high enough to force employers to compete for low-skill low wage workers resulting in better wages at the bottom. This would result in a rise in prices on some basic goods like food but it would be one off.
But getting this right in an unplanned economy is very difficult and planning around the edges like a JG or BIG is unlikely to be satisfactory in the end.
Here's Rush on "freeloaders" send this paper over to him:
http://www.youtube.com/watch?v=E11Dmt3UEHE
I'm sure he'd enjoy it...
OK Warren proposes providing $500/mo to all US persons for healthcare which is 150B/mo and I dont see any hyperinflation/debasing predicted there.. so the BIG providing more than that I guess creates the hyperinflation..... so it's a greater than $500/mo issue...
Where is it then? $1500/mo? $2000 per month?
If we go with $2000/month, times all 300M US citizens is 7.2T per year which is less than half of current GDP.... so how can we have hyperinflation if the govt just provides settlement balances for less than half of current GDP?
Collapse in output? With everyone flush with balances? Everyone then has settlement balances and output collapses?
And btw they are currently providing about $4.5T annually so I guess we should be terrified of them here providing another 2.7T of settlement balances annually net?
I guess we cant make sure that everyone gets enough settlement balances to consume what we produce.... too bad....
And ...
Shouldn't we plan for the day when robots do nearly ALL labor? What then? Will the JG folks continue to implicitly blame the dis-employed?
And how has the technology to make robots been financed anyway? Ethically? How is a government-backed usury for stolen purchasing power cartel in anyway ethical? Especially in our so-called "free-market economy"?
No F.,
If we allow bank credit to hold and be maintained here at 7T, that's ok, but if were to just provide the settlement balances, everyone would just go smoke pot I guess...
So with lending balances: No pot smoking.
With direct govt provision of balances: Much pot smoking.
(Oh: Minus the $500/mo for heathcare...)
Get with the program!
If nearly everyone is on the dole, who produces the things we want? Bummer. Guess folks will have to do their lawns themselves. And who the heck is gonna steam clean the carpets or deliver all that stuff. I used to drove a truck. so can I collect money and still drive the truck or must I pick one. I kinda know which way I'm gonna go already. Won't be any inflation you say?
I think someone has to work and the pay has to be more than the dole. If the minimum wage is sufficiently over the dole, folks would rather work. Sounds like a JG to me. Doesn't seem like a bright idea to make work less important.
I've never really understood the desire for a work program, I have a real problem with the authoritarian rhetoric involved with a lot of the proposals as well. People have got to be free to choose what they want to do with their lives.
Warren proposes provide balances for health care..
So if we do that then every one in that sector will quit
"If nearly everyone is on the dole"
I think the dole is designed for two of the ten dogs fighting over eight bones.
That and everyone in a civil society should be able to maintain some minimally adequate existence (not hard to define) if society has the capacity to produce it. We do (except for hoarding).
I'm on the dole (Social Security) and I work part-time in my own business (because the economy is in the toilet) and very few can afford my services…I live comfortably but I would love to have 4 or 5 times the work I have now (compared to the 10 times I had pre-2008 which was too much).
Australia has a roughly $16.00 minimum wage and as far as I know their economy is in better shape than ours (lower unemployment). Many there think even that level is not enough.
As was mentioned earlier, if most of our future labor is performed by machines does that make humans irrelevant?
If everyone were on SS you would have the same problem as the dole for everyone. The dole is designed for ten dogs that once fought over ten bones. In fact it is pretty explicit about that. No one has to work - unless of course you want a billion dollars.
Do you really think there is a time coming in the foreseeable future when humans will be irrelevant ? Now I know I will be frozen to await that day.
Oh well. We can all dream. Has anyone asked whether there is any chance, any chance at all, this will be signed on by congress? I'm signing up.
"If everyone were on SS you would have the same problem as the dole for everyone"
I don't think anyone is suggesting the dole for everyone, and everyone on S/S is not a plausible scenario.
Still, working people are mighty lucky they have folks on the dole...it creates a lot of aggregate demand...a lot of it for goods and services that would be irrelevant if people were living at a subsistence level.
There are currently 45 million people on S/S at an average of about $1500/mo.
The employed workforce is at about 140 million including part-timers.
How do you think the economy would be doing without S/S spending (plus Medicare)?
The moral arguments always seem to lead to sub-optimal outcomes.
As far as the man vs machine argument I'm not arguing in favor or against anything just describing what seems to me to be the inevitable future. I will surely be dead before then.
We can as a species allow a handful of parasites to limit our outcomes for their own gain or we can become a part of the solution.
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