Monday, September 26, 2016

Bill Mitchell — Is there a case for a basic income guarantee – Part 4 – robot edition

This is Part 4 in the mini-series discussing the relative merits of the basic income guarantee proposal and the Job Guarantee proposal. It is the ‘robot edition’. The march of the robots is the latest pretext that basic income proponents (including the IMF now) use to justify their policy advocacy. There is some truth in the claims that the so-called ‘second machine age’, marked by the arrival of robots, is not only gathering speed, but is different from the first period of machine development with respect to its capacity to wipe out human involvement in production. But the claims are somewhat over the top. Further the claims that these trends are inevitable are in denial of the basic capacities of the state to legislate in the common interest. While the innovations in technology will free labour from repetitive and boring work and improve productivity in those tasks, there is no inevitability that robots will develop outside the legislative framework administered by the state and overrun humanity (even if the predictions of robot autonomy are at all realistic). We will surely need to develop a coherent adjustment framework to allow these transitions to occur equitably and where they are not possible (due to limits on worker capacity) alternative visions of productive work are developed?
Further, the Job Guarantee is a better vehicle for handling these type of transitions and creating new forms of productive work. Adopting a basic income guarantee in this context just amounts to surrender.…
Bill Mitchell – billy blog
Is there a case for a basic income guarantee – Part 4 – robot edition
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

16 comments:

Andrew Anderson said...

Further, the Job Guarantee is a better vehicle for handling these type of transitions and creating new forms of productive work. Bill Mitchell

I can only imagine [shudder] what those new forms would be.

The problem is lack of aggregate demand so why drag in the kitchen sink of a Job Guarantee?

Tyrants to the Right of me, tyrants to the Left ...

Vernon L. Etzel said...

Public service is not tyranny. Private ownership of the state is tyranny. Privatization is the threat, not our federal government

Andrew Anderson said...

Privatization IS a threat but so is unnecessary expansion of the State.

The real purpose of a Job Guarantee is to burn up the time, energy and morale of the dis-employeed so they'll not be a threat to the Establishment.

This is not to say we should not have generous infrastructure spending since it is sorely needed but let's please not pay people to waste their time and expect anything good of it.

Random said...

"so they'll not be a threat to the Establishment."

What the hell does this mean? Are you endorsing violence?

Ralph Musgrave said...

Why on Earth does it have to be "JG or BIG"? Both at once is perfectly feasible. Indeed that's positively DESIRABLE: BIG is the obvious next best option for those who don't want a JG job (e.g. because they think they'll find a regular job fairly quickly).

Plus if a big employer goes bust in a small town, the idea that JG jobs can be arranged for everyone immediately (other than ridiculously unproductive JG jobs) is pie in the sky.

Andrew Anderson said...

Are you endorsing violence? Random

Not at all. I meant a threat as in having the time and energy to think about and protest injustice.

Andrew Anderson said...

Plus if a big employer goes bust in a small town, the idea that JG jobs can be arranged for everyone immediately (other than ridiculously unproductive JG jobs) Ralph

You raise another point - what will be construed as unfair competition with the private sector if the JG does produce desirable goods and services. So the tendency will be for a JG to produce undesirable goods and services?

Matthew Franko said...

Many of our highest paid are sports and entertainment people....

They dont "produce" anything ... tangible....

So over in the other thread you guys are using "surfers" as a pejorative yet there are professional surfers who are paid a lot of money...

MLB players can make 10s of $Ms per year and that industry has anti-trust exemption and free use of public facilities which are $Bs subsidies...

The sports & entertainment income distribution is extremely subsidized and ends up very top heavy and leaves the developing levels of people in those fields with basically shit...

Tom Hickey said...

The sports industry is 95% rent and it should either be addressed ex ante or else taxed away ex post.

This is true of almost everything that depends on mass markets, mass production and mass media. Firms and individual s profit from institutional arrangements that they didn't create and nevertheless depend on.

A modern economy is a huge complex system that is generated by the input of individuals, firms, the domestic government (in the US federal, state and local) and the external sector. Without this interaction a modern economy would be impossible. Individuals and firms cannot claim to produce the major of what they collect as "profits" in this environment. It's mostly rent.

For example, there is a fire security firm here on the front of which is a big sign put up on the owner reading, "I built this business, not the government."

Well, I happen to know how the fire security business operates. Ordinances require fire security inspections on a periodic basis with stiff fines for violations and the potential the the business will be closed until met. So companies hire fires security firms for the purpose of ensign that the requirements are met in a timely way. Without those ordinances, that guy would not have a business at all.

Matthew Franko said...

Yeah but Tom that fire guy isnt as bad as these sports owners who get free use of $Bs of assets and anti-trust exemption...

At least that fire guy has to compete with Cintas and whoever else is out there... has to buy his own trucks and warehousing...

M&T bank stadium used to host big UMD games there (Penn State, Michigan, Navy, etc...) and the HS football state championships for all the 4 Divisions as they had the artificial surface ... now the Ravens got real grass put in and new grow lighting (which they didnt even pay for...) and now no one else can play there because they dont want the turf all torn up... must be nice...

Absolutely NO baseball games ever at Oriole Park other than the Orioles....

The whole thing is a big scam....



Tom Hickey said...

Agree, Matt. Almost all "big business' is based on rents. But even a lot of small business is too.

Ignacio said...

"The whole thing is a big scam...."

Nothing to disagree here. The whole sports thing is a scam.

Matthew Franko said...

I could see amateur/developmental level sports (and arts) really taking off with a BIG....

Neil Wilson said...

"Both at once is perfectly feasible."

It isn't. What you are talking about is unemployment benefit, and that was non-controversial in Beverages day.

A BIG isn't a BIG unless it is at a living wage and paid to all, and recovered by shifting the tax rates.

If it isn't the living wage you can't live off it, so it just becomes a form of tax credits - aka a subsidy for business. And we know the problems with tax credits - it lowers productivity by reducing the cost of labour vs. capital and there still won't be enough jobs for all so some people will end up in destitution.

If the income guarantee isn't paid to all, then it is just a form of unemployment benefit or state pension - and we already know how those work. Pensions require acknowledgement of prior contribution - so there is an age below which people won't accept you've earned it - and unemployment benefit can only be paid for a very short time and a very low rate. It is just there to tide you over a period of frictional unemployment.

If you don't shift the tax rates, then the withdrawal mechanism is just the same as the one on tax credits - i.e. you don't get paid it in the first place. That reduces the psychological loss aversion response from all the population to just the lower end that actually gets tax credits. And again the level of tax credits can only be at a very low level.

So if we're talking about BIG, let's talk about BIG - the idea of something that crosses the rubicon where you don't have to work for a living and can fulfil your dream of becomes a middle-class aristocrat where the state tops up your disposable income trust fund so you can have new wellies for your next trip to Glasto.

Neil Wilson said...

*Beveridge.

(Flipping autocorrect).

"Plus if a big employer goes bust in a small town, the idea that JG jobs can be arranged for everyone immediately (other than ridiculously unproductive JG jobs) is pie in the sky."

If a big employer goes bust in a small town, then you already have a monoculture problem. One of the reasons for pulling people away from big employers is to introduce diversity into areas. The JG helps put spending and investment into areas and avoid these concentrated pockets.

But the way you deal with an influx is the same way as you would on JG startup. You put people on gardening leave while you create the jobs necessary. That maintenance payment allows the local economy to adjust and allows the new private businesses that spring up when a large company goes bust to establish and get going.

The population will accept that solution short term, and in the short term it does little harm. Hence why basic income 'trials' appear initially successful but over time fail.

Then you find people something to do as quick as you can. One of the first set of jobs to create is of course an expansion of the local JG facilities to help people create and find stuff to do.

Remember that everybody needs something to do with their day. Correctly designed the JG is there to shape what people do with their day into something that is clearly 'service to others' and can therefor be called a job.

Andrew Anderson said...

Remember that everybody needs something to do with their day. Neil

Then what is stopping them? The theft of family farms, businesses, the commons, investment opportunity and even the roofs over their head by what is, in essence, a government privileged usury cartel?

So how about working for the return of assets that ALLOW people to work and ending the means by which they were stolen in the first place?