The idea of a basic income guarantee is very popular with readers, more so that the notion of a job guarantee. Yet as we have mentioned in passing, this very sort of program was put in place on a large-scale basis in the past. Initially, it was very popular. However, in the long run it proved to be destructive to the recipients while tremendously beneficial to employers, who used the income support to further lower wages, thus increasing costs to the state and further reducing incentives to work. And when the system was dismantled, it was arguably the working poor, as opposed to the ones who had quit working altogether, who were hurt the most. It is also intriguing to note that this historical precedent is likely to resemble a a contemporary version of a basic income guarantee.Caveats for the design of a BIG policy.
BWT, at least some MMT economists are not opposed to a basic income guarantee in addition to a job guarantee. The point out that a basic income guarantee is not a replacement for a job guarantee. The do different things. Some kind of guaranteed income is needed for those unable or unwilling to work if a job guarantee is not to be transformed into workfare, for instance. So some MMT economists would make a JG optional while also providing other safety net benefits for the unemployed to address poverty and destitution. Neither a JG nor a BIG would suffice to replace unemployment insurance, for example, which prevents higher skill workers from being forced to take work beneath their knowledge and skill level. An integrated policy is needed to address different needs effectively and efficiently, both socially and economically.
Naked Capitalism
The Failure of a Past Basic Income Guarantee, the Speenhamland System
Yves Smith
She puts a JG/BIG topic out pretty regularly, rehashing the same thing over and over. Probably does it because it garners a lot of eyeballs, or at least has in the past. Dan Lynch usually has a lucid rejoinder that gets under her, skippy's and Lambert's skin. That's because Dan is right and they are wrong :)
ReplyDeleteOther than the intellectual gymnastics the topic provokes, I find it passe because it isn't going to come to fruition, anyways, as far as the eye can see.
@Malmo's Ghost, thanks for the kind words. :-)
ReplyDeleteAs I posted on the NK comments, the Speenhamland effect can easily be avoided by setting the means-tested BIG amount lower than the minimum wage. I.e., if the minimum wage is $300/week, the BIG could be $250/week. End of problem.
I have a great deal of respect for Yves. She disappointed me by jumping on the JG bandwagon and dissing the BIG.
But like you said "it isn't going to come to fruition as far as the eye can see." It's good to know, for our own sanity, that a better economic system is possible, but it ain't gonna happen without a revolution in the political system.
A basic income *is* a Job Guarantee. The job is just 'spend the money I've been given'.
ReplyDeleteWhere the people receiving that money are seen as being capable or required only to do that job that is fine. So the retired, those who are disabled or the young.
In any other case you will get a build up of resentment which will destroy the system. As we have seen with Unemployment benefit, retirement pensions or anything else that involves 'giving' things to people.
BIG cannot work because - humans. We genetically require to see quid pro quo. When people don't see that they vote for the other lot - who then take the punch bowl away.
Those who think income guarantees can work - even when they are less than the minimum wage - frankly need to get out more. They have all been destroyed or substantially weakened. They all are deployed within a small zone within a currency area - relying on the fixed exchange rate to export the unemployment to elsewhere (just like Germany does in the Eurozone).
They don't work. They can't work. They are a pipe dream.
And that's before you get onto the other issue that people need something to do and very few people are actually very good at finding something to do, and certainly not good at finding something to do and then selling what they are doing as worthwhile.
BIG supporters have a philosophical viewpoint and curve fit to that viewpoint. They ignore the evidence on isolation. They ignore the evidence on the social benefits of good quality work. They ignore the copious numbers of scheme failures.
They ignore the polls.
Because this is about belief rather than designing something that might actually work.
@Neil, many of the things you say about human nature are true, and I agree that many of the BIG proposals floating around are unworkable economically, never mind the politics.
ReplyDeleteHowever, MMT is hypocritical to emphasize polls and "political viabilty" because polls show that most people don't like deficit spending, either.
Also, polls show that most Americans don't like free trade. Where is MMT's concern for polls and political viability when it come to free trade?
Meanwhile, polls show that Americans are cool with bombing the shit out of brown people and with cops murdering unarmed black people. If there had been polls in Nazi Germany, I'm sure they would have shown that most Germans were cool with the Nazi treatment of Jews.
I grew up in the Jim Crow South and quickly learned that human nature could be very ugly and that doing the right thing was sometimes unpopular.
JG proponents who oppose transfers ignore the fact that the majority of the poor are not in the labor force -- they're children, students, stay-at-home parents, the disabled, and the elderly.
I advocate for what I believe is best even if it is not popular. My subsistence level BIG proposal *is* economically viable. It may never be politically viable in my lifetime, but I don't think a living wage non-coercive JG will ever be politically viable in my lifetime, either.
No matter. Only a morally vacuous person would limit themselves to what the masses support.
Mass unemployment is so much better than a JG or a BIG. There's no political movement to reduce it, so it must be what the majority wants. Mass unemployment without a safety net will be even better.
ReplyDeleteCharles Murray has my vote on this:
ReplyDeletehttp://www.pbs.org/newshour/making-sense/libertarian-charles-murray-the-welfare-state-has-denuded-our-civic-culture/
Neil all the same points can be said about a JG. JG goes as much against social and political reality as a BIG.
ReplyDeleteThe same stiff opposition will be found (okay, maybe a bit less). Not happening any time soon because it's not doable in practice.
We will rot and starve before anything that stinks 'socialism' is applied under the current paradigm. So yes as Bob up here says: "having no JG OR BIG is much better, having one without a safety net will be even cooler" that's where we are headed, the regression of the civil society towards a wild west free-market barbarism ridden society continues it's unstoppable force.
All the moronic "austrian and libertarians" are getting their dream state, just not realizing it's a nightmare, all well served by their more intelligent and 'grown up' counter-parties, the neoliberal elites in both high and mid-tier management in society.
Good grief!