Monday, June 24, 2013

Randy Wray —Are More Jobs The Answer? The “BIG” Bait and Switch


More on the basic income guarantee (BIG) versus the job guarantee (JG).

Economonitor — Great Leap Forward
Are More Jobs The Answer? The “BIG” Bait and Switch
L. Randall Wray | Professor of Economics, UMKC

38 comments:

Matt Franko said...

"Of course we all ought to give to charity—from each according to ability to each according to need."

Marx was talking about charity here?

"But all else would not be constant if we paid “every man, woman, and child” in the US, say, $87,800 per year. Because we’d add just about two or three zeros to all prices and wages in the US—at least within a reasonably narrow margin of error."

I thought it is about price not quantity?

F. Beard said...

Victims should not have to work for their restitution!

James said...

I'm with Beard on this one, the arguments for forcing people to work just doesn't fit with me. Everytime I read something about this issue from either the MMT position or those proposing a basic income, it comes up short imo, and both end up having a underlying authoritarian edge to them. With the basic income it's the part about providing something just above poverty level, well how kind of them, maybe the poor could give their shoes a nice polish while they're down on their knees.

The arrogance of believing you know what's best for every individual man or woman is the start of a very slippery slope.



Malmo's Ghost said...

I'd rather have flat out wage parity than a JG. I'd also prefer BIG to JG. I'm not a big fan of either, however. If the JG is somehow made a reality it better pay me what a tenured economics professor makes rather than what a convenience store clerk gets.. Fat chance of that happening, I'm sure.

Adam1 said...

It's about output distribution and how to get to a better (and ideally sustainable) distribution. If you don't change the output distribution but give everyone a job then you end up with full employment and lots of poverty. If you just give everyone a basic income without changing the distribution you just get a lot of inflation.

F. Beard said...

It's about output distribution and how to get to a better (and ideally sustainable) distribution. Adam1

Common stock as private money has both positive and negative feedback coming from (potentially) all money (share) owners.

On one hand, the money owners do not wish to dilute the value of their shares by issuing more of them but on the other hand they to increase the value of their existing shares by issuing new shares to purchase valuable assets.

The above feedback should result in optimum creation and distribution of new purchasing power.

Dan Kervick said...

What should be the underlying contract on which our society is based? What obligations should people have to discharge to their society in exchange for enjoying the benefits of living in that society?

F. Beard said...

What should be the underlying contract on which our society is based? Dan Kervick

That government works for the "general welfare", not for the benefit of usurers and the so-called "creditworthy."

What obligations should people have to discharge to their society in exchange for enjoying the benefits of living in that society? Dan Kervick

To deal honestly with their neighbors is the bare minimum; not to drive them into debt with their own stolen purchasing power as the banks do.

Dan Kervick said...

I see BIG as a dangerous slippy slope toward social stratification and dependency. It would intensify the divisions between those who see themselves as part of the productive economy and those who are wards of the state, with atrophying skills and work habits, dependent on the producers for support.

But I agree with Malmo that a commitment to some measure of income leveling must be part of the mix. I don't like Warren M.'s emphasis on a JG that is just a minimum wage program that hires from the bottom and doesn't interfere with the private sector.

We need more such "interference". Private enterprise is incapable of fully and efficiently organizing humanity in the production of the kind of life that most of us would prefer. Leaving it up to everyone just to do their own private economic thing leaves us with a world that is worse than the one most of those people would prefer.

Whatever total amount of work our society deems appropriate to achieve the total level of income it desires, we should strive for much more equal sharing of both the burdens of that work and its benefits.

It is unfair to ask people to work very hard to support others who are either indolent or pursuing a way of life that is purely of their own choosing. It is also unfair to pay peanuts to people who are doing their jobs and diligently exerting themselves within the scope of their natural abilities, while paying others fortunes.

And for what its worth, I think these pictures of robot futures are misleading. Technology can take over much of what we do now. But people continuously dream of new previously imagined forms of progress when standing on the shoulders of their current level of progress, and continuously invent new kinds of work and to satisfy those dreams.

Dan Kervick said...

F. Beard, as usual you didn't answer the question, since as usual you only have two thoughts in your head which you mechanically repeat in response to every question.

JLC said...

Thought I’d share this quote from Buckmister Fuller:

“We must do away with the absolutely specious notion that everybody has to earn a living. It is a fact today that one in ten thousand of us can make a technological breakthrough capable of supporting all the rest. The youth of today are absolutely right in recognizing this nonsense of earning a living.
We keep inventing jobs because of this false idea that everybody has to be employed at some kind of drudgery because, according to Malthusian-Darwinian theory, he must justify his right to exist. So we have inspectors of inspectors and people making instruments for inspectors to inspect inspectors.
The true business of people should be to go back to school and think about whatever it was they were thinking about before somebody came along and told them they had to earn a living.”

And this quote (author unknown - - see http://www.michaeljournal.org/plenty36.htm for full article) (I thought the last part is very MMTish):

“Some might retort: “Giving money to people for doing nothing would be a dividend!” Exactly, it would be a dividend. And therein lies the problem: it is not an unemployment problem, but a dividend problem. It is not a production problem, but a distribution problem. One must not seek to make people work in the place of machines, but seek to distribute the products of the machines to people who have needs, without forcing these people to work, since the machines are working in their stead.

“Wages are intended to purchase the products stemming from brawns and brains, whereas dividends are intended to purchase the products of the machine. When man works with his hands, he gets a wage. When it is the machine that works in the place of men, all men should get a dividend. The products stemming from the hands are paid for with wages. The products of the machines should be paid for with dividends. The products stemming from the hands are the fruits of human labour. It is the wages, the remuneration of human labour, which can pay for the products stemming from the hands. The products of the machines come free of charge, without human labour. Since the products of the machine are free, the money to purchase these free products must also be given for free. And free money is a dividend. . . . .

— But, who will be paying for this dividend? — Society, since it is a social dividend. — But will not society tax us for it? — Not at all. If society was to tax us, it would be removing money from us. It would be the opposite of giving us money, the opposite of the dividend. We must get free money, money given to purchase progress. It is not taxes that we need.
— But from where will society take this money to give to everyone? From where will Canada take so much money to give out to all Canadians? — From the accounting ledgers. Money is basically a matter of bookkeeping; it is figures. The monetary system is put into function by the banks. And at the head of our banking system, we have the Bank of Canada. The Bank of Canada must see to the issue of necessary money in order for each Canadian to get a dividend, each month — let us say of at least $800 — so that each Canadian can purchase his share of the products from progress, products manufactured by the machine.”

y said...

James,

"the arguments for forcing people to work just doesn't fit with me"

The 'job guarantee' or 'employer of last resort' idea isn't about forcing people to work. So where is the 'authoritarian edge'?

Malmo's Ghost said...

"Whatever total amount of work our society deems appropriate to achieve the total level of income it desires, we should strive for much more equal sharing of both the burdens of that work and its benefits."

Very well put.

I think if we are going to live in a sustainable and generally harmonious world going forward we have to try to thread the needle in the way you describe above. We don't need workaholics, but we also don't need freeloaders either.

We could start by using the technology that is our monetary system to further these ends too. The brainpower and resources are also in place to achieve much of the above. Only the will is lacking. Even if we don't get it just right that doesn't mean we shouldn't try. Of course it won't be achieved overnight, but that is no reason to put off acting. If we go on as we are, essentially walking blindly into the future, then I fear the downward trajectory will be at some point immediate and unstoppable. We have to somehow collectively not let that happen. Wish I knew how to get the movement started....

Matt Franko said...

Mal,

I think you have to start (step 1) with the monetary system...

You have to get people to the point where they fully understand that our govt (now) has the complete authority to pay people to do what ever is determined thru our democratic processes to be in the best public interest... then a lot of options open up...

rsp,

Matt Franko said...

Wray (and Tcherneva's) view about the effects of a BIG on so-called "inflation" is not unlike a monetarists view at core... it is based on the concept of "quantity not price"...

rsp,

y said...

I very much doubt that, Matt.

Matt Franko said...

y,

I'd like to give it a try.... ;)

rsp,

Tom Hickey said...

DK: What should be the underlying contract on which our society is based? What obligations should people have to discharge to their society in exchange for enjoying the benefits of living in that society?

What constitutes the good life and the good society, and the good life in the good society? These the perennial questions in social and political philosophy and they depend on one's conception of ontology, epistemology, ethics and aesthetics, as well as the cultural conditions and social institutions that prevail.

Generally all of this is assumed in politics and economics, and a lot of the assumptions are naive or biased by narrow interest or uncritical ideology.

This is the philosophical debate about foundations that we should be having as a society and are not other than at the periphery. The result is lack of clarity and outright confusion that benefits propagandists.

James said...

y

"The 'job guarantee' or 'employer of last resort' idea isn't about forcing people to work"

What happens to people who don't want to do the work on offer? from what I've read it seems to say every able bodied man or woman will be offered the job guarantee. I can't remember reading anything about those who refuse to take part.

I apologise if it's been discussed before, but I've not seen anything about that scenario. Will these people be left to starve for refusing to work? will they be given an income that keeps them in virtual poverty? which seems to be the way a basic income guarantee would work, which is basically the extension of the dole, which imo is an authoritarian system, designed to discipline people who don't comply, and make their lives so miserable they'll accept any job on offer.

Like I said, I'm sorry if this has already been discussed, but every time I see the job gurantee mentioned, and someone asks what jobs people will be hired to do, no one seems to have any real response, other than, there's always something that needs doing.

F. Beard said...

Gee wiz Danny, haven't you heard of Occam's razor? Just how many more root causes besides usury for stolen purchasing power do you think they are?

F. Beard said...

make that "there are", please.

F. Beard said...

...and those who are wards of the state, with atrophying skills and work habits, dependent on the producers for support. Dan K

You mean like bank owners?

Why don't you concern yourself with justice and not concern yourself with people's lifestyle choices?

F. Beard said...

But if want people to work then how about returning to them the resources necessary such as family farms? There's plenty of work to be done on farms, no?

What? You would not like an independent class of Kulaks?

F. Beard said...

JLC,

Great Buckminster Fuller quote!

And since automation was likely financed with the general population's own stolen purchasing power, then a universal dividend is appropriate.

Malmo's Ghost said...

A good start in seeking the good life might IMO begin with Popper's open society.

Dan Kervick said...

Expecting society to give you things independently of an obligation to give society something in return is not just a "lifestyle choice". Reciprocity is the basis of justice in my view.

F. Beard said...

Well, society has given a lot to the banks (e.g. a legal tender lender of last resort, government deposit insurance, sovereign borrowing, a de facto fiat storage and transaction service by default, the capital gains tax on common stock, an non-usury based money form, etc.)

And the banks have used those privileges to drive the population into debt and dispossess it of farms and homes.

So it's only simple justice that the victims of the banks be given restitution.

F. Beard said...

Make that "a de facto fiat storage and transaction monopoly by default", please.

paul said...

"Reciprocity is the basis of justice in my view."

Choice is an element of justice too.

y said...

"What happens to people who don't want to do the work on offer?"

That depends on what support a country decides to provide for the unemployed (unemployment benefits) etc.

"every time I see the job gurantee mentioned, and someone asks what jobs people will be hired to do, no one seems to have any real response"

Well it depends on the context and on how specific programs are designed.

"First, it is not necessary for the national government to formulate and run the program. It can be highly decentralized—to local government, local not-for-profit community service organization, parks and recreation agencies, school districts, and worker cooperatives. Local communities could propose projects, with local agencies or governments running them. National government involvement might be limited to providing funding and—perhaps—project approval".

http://neweconomicperspectives.org/2012/04/mmp-blog-46-the-job-guarantee-program-manageability.html

Anonymous said...

@Dan,

You're worried about a slippery slope toward indolence? Personally, I'd like to be a bit more indolent. Can I work 30 hours, say, instead of 40 and have 10 extra to do something really productive instead of this crap that I'm paid to do?

But that aside, your worries could be allayed by shortening the work week -- no job guarantee needed. This is what Germany did, no? (Not that I'm holding up Germany as an example of all wonderful policies.)

If Social Security were extended to all, those who worked would do so because they wanted more stuff or because they liked their work. Sure, people will always look down on others, but when equality was a foundation of the system, they would just look like whiners. And the stipend doesn't have to be enough to allow people to live princely lives without work, just enough to allow people dignity and choice in a system that's still beholden to rentiers and hoarders.

xan said...

“Wages are intended to purchase the products stemming from brawns and brains, whereas dividends are intended to purchase the products of the machine. When man works with his hands, he gets a wage. When it is the machine that works in the place of men, all men should get a dividend. The products stemming from the hands are paid for with wages. The products of the machines should be paid for with dividends. The products stemming from the hands are the fruits of human labour. It is the wages, the remuneration of human labour, which can pay for the products stemming from the hands. The products of the machines come free of charge, without human labour. Since the products of the machine are free, the money to purchase these free products must also be given for free. And free money is a dividend. . . . ."

This is an interesting idea, but how could it, or should it, be managed to have wages spent on fruits and dividends spent on machine products? Two currencies, a local (wage) and a national (dividend)? It seems much of the problem with implementing such an idea is that our system, or perhaps certain people who head our system, see people as machines (I'm looking at you Henry Ford) and therefore those fruits as their dividends. Maybe this is an argument for a minimum wage, one that provides each of us with at least a materially sustainable life in exchange for our work, if we are allowed to work. Which brings us to...

The Job Guarantee does not negate other kinds of guarantees - housing, food, heathcare.I think what drives a lot of our problems - hoarding, greed, distrust, prejudice, etc. is a fear of loosing what we need, like a place to sleep and keep secure, food to eat, some kind of stability. All of that is essentially tied to our job right now. Knowing that a job will always be there should not be seen as some type of oppression. That is how I live now. I always need a job and I have always had a job. Needing a job was never as bad as needing to stay at the job I was at. That was oppressive.

Back in the 90s, when unemployment in my state was around 3%, I could change jobs easily, I could take time off if I wanted, travel the world, and come back knowing there would be a job waiting for me somewhere.

Perhaps our criticism of the JG is not so much about the guarantee, but about the way jobs are structured in our society - lose your job you lose insurance (health), housing (shelter), knowing where your next meal would come from (food), and potentially family and friends (social structure). Everything is built around our jobs, on which we are completely dependent. From this point of view a JG may not seem that reassuring, but it is better. But I don't think anyone would advocate this as the only solution. Structural changes are needed. I think Bucky is on to something.

James said...

y

Thanks for the reply, it does reinforce my point though. There is no real choice being advocated, a jobs guarantee is telling people they either accept becoming a resource to be used by the community, if they refuse, they can survive in virtual poverty on the dole.

It comes back to the age old problem of class, society doesn't seem to ask or expect anything from the children of the wealthy and upper middle classes, it's freedom and choice for them, the world is their oyster and anyone who questions it is accused of practicing the "politics of envy", but it's community service or poverty for the unemployed and lower classes, they've got to prove that they are worthy to take part in society, and if they refuse then they will be disciplined.




y said...

James,

what's your alternative solution?

The JG/ELR is a pragmatic solution to involuntary unemployment. However if people don't want a job then they aren't forced to take one.

I'm not sure what it is that you are advocating. Revolution?

F. Beard said...

Here's a principled solution:

Since large corporations were built with the stolen purchasing power of the entire population* then let's equally distribute their common stock to the entire population. As for agricultural land, a return to the original owners ala Leviticus 25 might be in order too along with a new Homestead Act.

*via loans from or ownership of the government-backed counterfeiting cartel, the banking system.

paul said...

I'm with James on this one…

…although the issue is not black-and-white.

F. Beard said...

I'm with James too, if it isn't obvious.

Malmo's Ghost said...

I'm with Tom, abellia, James and Dan...