Wednesday, July 30, 2014

Pavlina Tcherneva — 16 Reasons Matt Yglesias is Wrong about the Job Guarantee vs. Basic Income

After straw manning the JG, Yglesias expresses his enthusiasm for a Basic Income Guarantee (BIG). He prefers simply handing out money to the jobless because it’s not as “messy” as the JG. (I’ve already argued why such objections should not be taken seriously). But more importantly, like many BIG advocates, he assumes that the BIG will magically solve the fundamental problem of economic insecurity.
Here are sixteen reasons why this assumption is wrong.
New Economic Perspectives

7 comments:

Ralph Musgrave said...

I can't see why JG and basic income are portrayed as ALTERNATIVES. We can perfectly well have both. In fact we already do have both - sort of, in the UK. That is we have the Work Program which offers subsidised temporary jobs. It's a defective program, but it's JG of a sort. Plus 99% of those not in work get some sort of benefit: unemployment benefit, invalidity benefit, etc.

Bob said...

Alternative implies a replacement or a choice.
Perhaps you mean they are portrayed as MUTUALLY EXCLUSIVE?
That's only because proponents are putting their ideas forward as if this was a football match.

As an aside:
Connie Stevens - 16 Reasons
https://www.youtube.com/watch?feature=player_detailpage&v=MFjG0WPrZtg

Neil Wilson said...

They are alternatives as proposed - because Basic income is proposed as universal and 'inalienable'.

Income guarantees for groups society consider worthy of an income guarantee is not a contentious point usually. So state pensions and disability benefit are generally not a problem.

The problem comes when you try and extend this beyond those groups for whom the mutual obligation is obvious . Age or infirmity are clearly valid reasons for being supported and there is little resentment generated by that.

That can be extended to other 'deserving' groups depending upon the maturity of public opinion.

When people are perceived to get something that others deem to be out of kilter with their perceived contribution you get agitation to do something about it. That applies to both rich and poor, and whether you're in work or not.

The resentment of the wealthy and the rise of the wealth tax is the perfect example. There is no economic need for it and it is far from the best way of solving the power or economic distribution problems. It's just a way of lashing out at those who are seen as not pulling their weight.

Yet the same people who support that often support a universal basic income where you are supposed to 'get over' the fact that some people won't pull their weight.

It doesn't work like that. You will get the same response in both cases - resentment of those not pulling their weight.

In the UK you would implement a Job Guarantee via the Universal Credit system. Anybody working for the public good who had a timesheet filed for hours by an eligible employer would be paid Universal Credit by the state - alongside those that receive Universal Credit automatically by virtue of age, infirmity or undertaking.

That is how you would combine a Job Guarantee and Income Guarantee scheme to best effect.

Those who refuse to work when they clearly could would still get nothing from the state - just as they do now. Their choice then is either to compromise, or rely on private charity.

James said...

Those who refuse to work when they clearly could would still get nothing from the state - just as they do now. Their choice then is either to compromise, or rely on private charity.

And they say people who want a basic income are living in cloud cuckoo land, if this is the proposal of the new serious people, you can count me out. This alone tells me all I need to know about the people who want a JG. A world that demands conformity, or you will be punished. It's this kind of perverse incentive I'd like to see the back of, not renewed, and reinforced.

Ryan Harris said...

Isn't the Tax-Credit program in the UK is a BIG-for working poor?

Bob said...

James: the existing welfare system requires people to make an effort to find work, else they risk losing benefits. Australia's recent proposal to require 40 job applications per month is a case in point. It reminds me of the circus, where the animals are made to perform tricks in order to receive their 'reward'.
A poorly implemented JG would spawn the same kind of cynicism that exists among welfare recipients today.

Calgacus said...

James: And they say people who want a basic income are living in cloud cuckoo land, if this is the proposal of the new serious people, you can count me out. This alone tells me all I need to know about the people who want a JG.

The JG and BIG in any of their forms are not mutually exclusive, or alternatives. MMT is not against BIGs of any sort. MMT is for the JG. The problem is proposals for a BIG & (often vehemently) against a JG, a BIG as a replacement, an improvement of the JG. It isn't, and can't be. The JG is much more important, far more beneficial, transformational and morally imperative to any society than the BIGs. (Unless you are a plutocrat, who have always understood that BIGs keep them on top, but the JG is a stake through their heart.)

Another, semantic problem is people using BIG to mean different things.
MMT does observe that the original UBI/BIG of Van Parijis emphatically is cloud cuckoo land. It says - give everybody a decent living income, for nothing, indexed to inflation. Say a constant real $30,000/person in the USA. Most MMT papers "against" BIGs are aimed at this.
This big BIG is definitely and obviously (hyper)inflationary. It doesn't have much to do with anybody resenting anybody else, but with things which are so glaringly obvious that people miss them. BIGs raise demand and lower supply; more money chasing fewer goods; result inflation. No society, especially highly monetary ones can follow "Something for nothing" as a general rule. So it is just a lie. It is a promise that can't be kept. It ain't possible in the real world. It's like proposing that Santa Claus, the Tooth Fairy and Spiderman get together and grant everybody 3 wishes, and that solves all economic problems. Sure, modern nations could afford a small universal BIG, like a few thousand / year, maybe enough for a very austere existence - but unlike the JG, that isn't going to solve major social problems.

Basically a small BIG, like a negative income tax is just "welfare", a safety net. All societies ever have had some form of "welfare" and all the academic MMTers support "welfare" and strengthening New Deal/ Great Society / Welfare State programs. But a crucial difference between the JG and the BIG is that the first promotes both liberty and cooperation, is bottom-up while the second is essentially authoritarian, top-down. There are those like Frances Coppola who rightly see things in those terms - I do and I think you do too - but they get things exactly backwards, unlike earlier 19th century thinkers and workers and modern MMT academics, who get it right.