We recently wrote about proposals to solve the unemployment problem in the U.S. (or anywhere else for that matter). Those proposals were presented here:
“We could solve unemployment immediately if we wanted to. Two “sensible” proposals.“
The first is called Job Guarantee and is well-discussed in thearticle. It basically makes sure that all the work that needs to be done is shared out to all those who can do it, independent of the 40-hour week. Read more about it at the link — it’s a good, equitable solution and has many adherents.
I want to complete that discussion here. The other proposal, mention in the article but not explored at length, is called Income Guarantee, sometimes Minimum Income or Basic Income. The idea is that the state delivers via check or deposit a minimum amount of money, a guaranteed basic annual income, regardless of need. Everyone who’s a citizen gets it.
For an example of a state with an Income Guarantee, look no further than Alaska and its Permanent Fund. In Alaska’s case, the money comes from oil leases, and every citizen gets a piece of it, every year, just for being a citizen of Alaska.
I know what you’re thinking — “how communist!” — but those independent (right-wing) free-thinking people of Alaska don’t mind one bit. If they don’t mind, who will?America Blog
Five reasons to consider a Basic Guaranteed Income for all Americans
Gaius Publius
Like a lot of people, Gaius does not clearly distinguish between a Universal Basic Income (UBI) and a means tested Basic Income Guarantee (MTBIG).
ReplyDeleteA true BIG guarantees that you will get a certain minimum income, usually near the poverty threshold. It does *NOT* guarantee that you will receive a BIG check IN ADDITION to your other income.
A universal income (UBI) gives everyone a BIG check even if they are a millionaire.
A MTBIG would cost about $250 billion while a UBI would cost about $2.5 trillion. That's a heckuva big difference.
Milt Friedman never advocated a UBI. His negative income tax proposal was a MTBIG -- you wouldn't receive the negative tax unless you were low income.
Canada's experimintal "MINCOME" program was a MTBIG, not a UBI.
Alaska funds its UBI with oil royalties. When the oil runs out, the Alaskan UBI will grind to a halt.
A MTBIG serves as an automatic stabilizer -- more people qualify for the MTBIG during recessions, increasing deficit spending. During booms, good paying jobs lure people off the BIG and into the labor force, reducing deficit spending.
A UBI is *NOT* an automatic stabilizer. Everyone gets a check in both booms and busts.
A MTBIG costing roughly $250 billion could be "paid for" with deficit spending, without new tax revenues, since our current deficit is too small, anyway.
A UBI costing roughly $2.5 trillion would be inflationary without substantial tax increases. Lotsa luck getting political approval for a $2 trillion tax increase.
I advocate a $250/week MTBIG because it would help the poor, because it could be implemented without tax increases, and because it would serve as an automatic stabilizer.
In theory, a UBI could be made to work satisfactorily providing the new taxes were highly progressive. If the new taxes were not progressive, the UBI could actually end up hurting the working class.
Switzerland's proposed UBI would be "paid for" with a combination of progressive tax increases and by replacing existing welfare programs. In addition, to the extent that inflation is driven by global commodity prices, it's unlikely that Switzerland's economy is big enough to have much impact on global commodity prices. The same is not true for the US economy.
It doesn't matter.
ReplyDeleteSadly.
The challenge is political.
Who has the fortitude to use this in their election platform?
Means tested basic income is variously called 'unemployment benefit', 'income support', 'job seekers allowance' and 'tax credits'.
ReplyDeleteOccasionally it is correctly called 'social security'.
And as you can see across the world, it's been a resounding success. Eliminated and cut back across continents since the end of the war.
Because being seen to provide 'something for nothing' is not a viable political position.
Something for nothing is necessary when there is unemployment. The future is trending towards more unemployment and a BIG. This option is more politically viable than a JG, at least in the US and Canada.
ReplyDeleteTrue the the politics are hopeless right now.
ReplyDeleteBut, we do not have a democracy, we have a plutocracy, led by psychopaths. Who knows what is possible in a real democracy with good leadership? Brazil currently has a type of MTBIG that seems to be well received.
Tho I suspect Switzerland's UBI ballot will fail because of the tax increases.
Neil, the same plutocrats and social conservatives who oppose social programs also opposed the New Deal job creation programs.
MMT/Minsky kid themselves when they assume that conservatives will support JG programs. No, conservatives will oppose anything that helps the poor (see Kalecki). Conservatives will only support punitive "workfare" programs like you have in the UK.
There is a saying, "the night is darkest before the dawn.
ReplyDeleteAnyone who's stood the last watch at sea knows the truth of this. It's more psychological than actual.
Things look bleak now but the pendulum has already swung very far to the right and the momentum is slowing as shown by the number of people talking about things like a JG and a BIG, as well as the number of time that Marx is being mentioned in the media.
The point of MMT policywise is that when a critical mass get it that taxes don't fund government spending and borrowing is not necessary to finance it either, that the issue is not solvency or even inflation, but rather the availability of real resources to meet needs and wants (these are different), then the political conversation will shift to possibilities and options rather than affordability and scarcity-thinking.