Sunday, April 29, 2018

Jeff Epstein — The Federal Job Guarantee Is Not Just “Better” Than a Universal Basic Income. It’s the Only Reasonable Option. Universal Basic Income Is Sinister.

Yves here. Another way to think about the warning of this post is: Beware of Silicon Valley libertarian billionaires bearing gifts.
Naked Capitalism
The Federal Job Guarantee Is Not Just “Better” Than a Universal Basic Income. It’s the Only Reasonable Option. Universal Basic Income Is Sinister.
Jeff Epstein, an independent and progressive journalist with Citizens’ Media TV
Originally published on Citizens’ Media TV


Andrew Anderson said...

Some excellent comments at the Naked Capitalism site. (I'm surprised Yves did not censor them (I was banned multiple times for advocating citizen accounts at the cb, an idea Yves calls "balmy" since (I paraphrase) "Central Banks have always been and always shall be ONLY for the banks."))

I now concede that an adequate UBI MAY cause excessive price inflation (Or it may not. Nor is a JG immune from this criticism since paying at least SOME people to waste* their time can hardly be expected to not produce excessive price inflation.)

Otoh, a Citizen's Dividend is only a supplement to income and can be adjusted as needed wrt price inflation targets.

*The alternative is to compete with the private sector with jobs created beyond those which are properly in the public sector. This would certainly face stiff opposition and properly so too.

Noah Way said...

Inflation is irrelevent and can be controlled with tax policy (not interest rates). Both JG and UBI can be sinister in implementation and will (if enacted) be used to gut social services and create a permanent class of low-cost labor. Nothing short of a complete overhaul is going to 'fix' anything.

Ryan Harris said...

Been reading today's MMT posts and this pattern is growing worse by the day: Why do some MMT evangelists reject the cost of borrowing money as relevant to credit supply and demand? MMT implicitly relies on the notion of price setting by government to control supply and demand for labor, commodities and other resources. Credit is no different in the sense it is a monopoly resource controlled by government. Credit growth isn't as important to economic growth rates in developed economies, yet I find it odd that Mosler prints weekly updates on sector by sector bank credit aggregates in the US, so surely he thinks it is important. Wray, Kelton and the other academics write extensively about credit. Why do these new MMT converts think credit growth is irrelevant and only fiscal policy *really* matters? My guess is in recent years following The GFC, credit growth has been weak, many young people in Western economies have little direct experience. Private spending and private credit drives maybe 2/3 of GDP even in the United States. Most of the time, we have rapidly expanding credit and investment booms looming in various technology driven areas.

Changes to interest rates on debt shifts income and investment between high-propensity spenders and low-propensity spenders, foreign and domestic sectors, government and private sectors. It changes calculations on risk and investment and where it is allocated relative to labor usage, to dismiss, with little more than a hand wave, ugh... credit costs have macro impact on growth or inflation, the Milton Friedman types obsession with credit was not completely wrong, just missing the other half of the equation which MMT better described.

MMT strength is on understanding banking and fiscal flows. Where MMT is weak is on nuance and understanding investment and capital and a external sector which is treated as an amorphous blob. MMT tends to portray those as a function of fiscal policy when there is an abundance of evidence to the contrary. I love the MMT model to understand, illuminate causal relationships, and describe correlations of much of what we see in the economy but some of the non-academics that have adopted the MMT ideas to promote their politics recently have begun bastardizing it in perverse ways in popular media and blog articles. These sort of errors used to be slammed by MMT blogosphere that would go off for weeks on accounting tirades. But there is so much written now, no one bats an eyelash even when MMT is abused and bastardized horribly.

Please stop pretending MMT doesn't fail as miserably as all other macro models through its own simplifications and wilful blindness. It's not a panacea that solves for the human failures that plague socialism, communism or capitalism with simple ideas like a JG. A JG will fail in the hands of political activists and economists too. It's only through education, awareness, measurement, and a constant struggle against PTB that a population succeeds not through adoption of an economic model. *rant over*

Tom Hickey said...

The MMT economists recognize that for the purpose of stimulus it is irrelevant whether the credits are US government or bank liabilities, or non-bank liabilities. In fact, most demand-pull price rises, including asset appreciation, due to is due to increase in private credit rather than public injections as most other economists assume.

MMT economists caution that private credit is income-dependent and therefore is unsustainable in the long run.

There is no such limitation on public injection.

The key is changes in there ratio of spending/saving desire. Saving in aggregate can only come from public injection (G) in excess of withdrawal (T)

According to MMT, the government's fiscal stance (G-T) must accommodate spending/saving desire so as not to overstretch private borrowing to accommodate saving desire and also to control inflation.

The objective is a "full employment budget." From the MMT POV, this is best accomplished through well-designed automatic stabilization and an MMT JG.

In my view, MMT is an attempt to fix a broken system, which is broken owing to a design failure emerging from prioritizing capital formation with an ill-defined concept of capital and an ignoring of economic rent to the point of operating in denial.

That is to say, MMT is an ad hoc fix, but the fix is depending on redesigning the system. But the issue is getting from here to there, and MMT based policy within the existing system is good first step in addressing the issues.

It is not the final step when a different system is called for, namely, one that integrates the factors of production, takes social, political and economic factors into account, and aims at social and ecological well-being instead of prioritizing individual self-interest.

This requires replacing homo economicus with homo socialis as a fundamental assumption.

Calgacus said...

Sigh. The JG is a complete overhaul. It changes everything. It is not a temporary, ad hoc fix. It completely changes the structure of the "capitalist system". Enough so that cognoscenti don't call the system capitalism any longer. What's the old word for it now? - oh "socialism". Today's Trumpy-Bear capitalism plus a JG = socialism.

That's what the mainstream socialists, Marxists like uhh Marx said. As did their paleoliberal, neoliberal capitalist opponents. They understood the issues. People who disagree with them don't.

The JG most certainly is a panacea, because not having a JG is psychotic. Just the same way that if you are addicted to stabbing yourself with knives, NOT stabbing yourself is a panacea. Just the same way slavery is insane, as it insists two contradictory things, that the slave is and is not a human being. I think people could think clearer back then because slavery was not as distant to them as it is from us. And thinking in terms of master and slave clears away the bullshit and clarifies the mind.

Andrew Anderson said...

Just the same way slavery is insane, as it insists two contradictory things, that the slave is and is not a human being. Calgacus

Yet you absolutely insist on wage-slavery to the State, as long as the slaves are well-treated?

The goal, and most non-psychotics would agree, imo, is to eliminate ALL wage-slavery, not supplement private sector wage slavery with public sector wage slavery.

My God believes in freedom and human dignity.


Tom Hickey said...

Wage-based labor in a financialized economy is debt-slavery.

The profit-wage system is the problem. And that system is based on the private ownership of "capital" that maintains the "profit rate" through extraction of economic rent.

This is what policy that prioritizes capital formation is all about.

The assumptions are wrong and need to be changed if distributional justice and societal well-being is to be achieved.

All that can be addressed otherwise is to decrease level of dysfunctionality without the possibility of removing it.

MMT can be perfectly implemented and there it won't remove the dysfunctionality from the profit-wage system based on rent-seeking. For one thing, there is no such thing as permanent policy and owning to class endowments the top of the town will always has the power to modify they system so that they retain control.

Class structure and class endowments need to be addressed in a way that prevents any class or cohort from hijacking the state.

Andrew Anderson said...

And that system is based on the private ownership of "capital" that maintains the "profit rate" through extraction of economic rent. Tom Hickey

The problem is not private ownership of capital but that capital is not roughly equally owned. In ancient Israel:
1) All Hebrews started out roughly equal wrt land ownership.
2) There were laws to keep it that way (e.g. Leviticus 25)

Interestingly, in the Old Testament profit IS GOOD but profit taking ISN'T GOOD. I note that common stock is a private money form that allows profit but without profit taking. But why should those with equity "share" it when that same equity allows them to borrow what is, in essence, the public's credit but for private gain?

Ryan Harris said...

It's strange to me that MMT academics and advocates refuse to acknowledge or identify the largest ever trial of a JG. Soviet Union constitution enshrouded the right to work for everyone. Their system was different in many ways but people everywhere are the same psychologically and respond similarly and their experience has many valuable insights into how people think and operate when guaranteed work. I don't think I've seen a single reference to Kornai in all of MMT literature yet his work on the JG predates nearly all of MMT and answers many of the fundamental questions about how supply and demand for labor works in full employment, effects on productivity and worker distribution -- since full employment is a completely foreign concept in the west, looking to places like China and Soviet experience where large scale trials have been done is probably useful?

The "inexplicable" problem with people refusing to packup and leave "red" states for blue states, council estates and benefit traps for blue-er skies isn't some anomaly, it's how humans operate at the deepest level. A bird in hand is worth 2 in the bush and all that. Our modern society doesn't place value on place and social structures so the decisions seem inexplicable using a British common law type western system of rules, values and analysis like we have in the US/UK. No question 50% of the population of Yorkshire and Wales should absolutely move to London/Edinburgh/Luton/Cambridge. It would increase their incomes by 30% almost guaranteed, yet they don't. Genetic tests of Yorkshire residents show a stunning percentage have lived there for 7 or 8 generations at least without mixing or intermarrying with a single outsider. But economics refuses to insist there is no reason for it. People are just dumb and stubborn. Well, a JG is going to create this red-state phenomenon on steroids and there is no model to describe it in econ that I've seen anyway ( I don't follow econ much anymore tbh).

Andrew Anderson said...


Good link on full employment in the Soviet Union.

Ryan Harris said...

Kornai should inspire a few design modifications to any job guarantee. It would avoid alot of egg on face for MMT. Or we could all pretend it didn't happen and learn the hard way.

Calgacus said...

Ryan, then you haven't read James Galbraith's The Predator State, which Wray called the best book on economics of the past decade. Galbraith uses Kornai's concept of soft budget constraints to help understand the "Keynesian Devolution" of the post-Reagan era, where there was "privatized Keynesianism" (cf also Colin Crouch on this), Kornai is probably in some of Wray's references too. Keynes himself and others of his era and before explored the issues in the link you gave. The soviet and eastern economy was a war-time, full-employment, command economy. Not too different from WWII economics as analyzed by Keynes et al back then, who explicitly made the point that their concepts applied to both the ultracapitalist Depression and the socialist war economies. (Even Hayek agreed with this back then) And the economics of the Depression and WWII were the basis that MMTers thought about, have contended that this economics contained invaluable but forgotten concepts.

since full employment is a completely foreign concept in the west, looking to places like China and Soviet experience where large scale trials have been done is probably useful?
No, it isn't a foreign concept. The phrase itself is western. There is plenty of experience with full employment in the west - the whole world in the postwar era. The world that Tom & I grew up in, that I believe you are too young to have seen directly. The New Deal is a fine example of very large scale full employment programs in a capitalist economy.

Well, a JG is going to create this red-state phenomenon on steroids and there is no model to describe it in econ that I've seen anyway. Classic Keynesianism, classical Keynesian modeling- the first economic "models", the modern Levy model etc, Keynes and Lerner and many others explored such geographic issues in their times. What more do you want? You seem to be generalizing from an exception, an outlier, the horrible US economy of your lifetime - the worst 30 year or so economic performance in the US since colonial times - that focused activity and jobs on the coasts, in a few areas, to an unprecedented degree.

Andrew Anderson said...
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Andrew Anderson said...

I'm not for a JG nor (anymore) for a UBI or a BIG. What I am for is a Citizen's Dividend. Think about it, fiat is the creation of and the property of the monetary sovereign. Then why do we allow the banks, other large users and foreigners to use it for free much less pay them for doing so (Interest on Reserves (IOR), positive yields on Treasury Bonds, etc.). Especially since the debt of a monetary sovereign is inherently risk-free* and should yield AT MOST** 0% to avoid welfare proportional to account balance.

Therefore, let's stop subsidizing the banks, the rich and foreigners and make them PAY for the use of fiat with the proceeds distributed equally to all adult citizens into individual negative-interest-free*** accounts of their own at the cb.

Who can legitimately oppose this?

*A current exception is physical fiat, aka "cash", which can be lost, stolen or destroyed. But electronic fiat which maintains the anonymity of "cash" but without its vulnerability to loss, theft or destruction shall, hopefully, soon largely replace it.

**And that's for the longest maturity wait, shorter maturity waits should cost more with account balances at the cb (0 maturity wait) costing the most.

***Up to, say, $250,000 in the case of the US.

Tom Hickey said...

Agree with Calgacus on this one, with reservations. MMT economists are up on this and more but other than in articles it's difficult to find.

We need several popular books based on MMT concepts that treat the fundamental issues in which people are interested in addition to talking to the profession and policy wonks.

Galbriath père et fils are excellent models, as was Veblen. Adolphe Lowe (Löwe) comes to mind, too. He was an economic sociologist, whole student was Robert Heilbroner. Mat Forstater wrote a paper on him.

Toward a New Instrumental Macroeconomics: Abba Lerner and Adolph Lowe on Economic Method, Theory, History and Policy

There are many others and the MMT economists refer to many of them.

The problem really began when the Democratic Party dumped Wallace from the ticket and replaced him with Harry Truman, who succeeded FDR on his death. The Democratic Party began its dive then.

I can understand the MMT economists though. Knowing all this, they are faced with a dilemma: If they veer too far left, emulating Wallace, they risk meeting his fate by being further marginalized. If the try to capture the center, then they have to dilute the formula and weaken the vision.

This is not a question of MMT but rather of political strategy. They are aware of the difference between policy and strategy, as Scott Fullwiler pointed out in the comments here in the past.

But unless the push is made for transitioning from late-stage capitalism typified by neoliberalism, managerial capitalism, and finance capital, there is going to be no progress from here to there. The steps are MMT JG to social democracy (new New Deal) to democratic socialism to full integration where all factors — social, political and economic — function in harmony.

This is not necessarily something that the MMT economists should be focused on however. That is a strategic choice.

Andrew Anderson said...

The steps are MMT JG to social democracy (new New Deal) to democratic socialism to full integration where all factors — social, political and economic — function in harmony. Tom Hickey

Justice is something we all should agree on, Left, Right Center, whatever. It is not a non-starter; it is the ONLY starter, especially in an idealistic country like the US, if you want a broad coalition across the political spectrum.

So how about the MMT folks starting with steps that NO ONE can disagree with such as accounts for all at the cb, negative interest/yields on US sovereign debt, a citizen's dividend and the progressive abolition of all privileges for the banks?

From there, once the population realizes they've been had by the banks and the rich, restitution in the form of asset re-distribution becomes much more doable, especially given that a coalition formed by the pursuit of undeniably just goals will have remained intact to that point.

And then, after asset redistribution has occurred, where to go from there can be re-assessed.

Calgacus said...

Andrew Anderson: Are you a beast or a god? (Glad to see you have abandoned the UBI)

"Anyone who either cannot lead the common life or is so self-sufficient as not to need to, and therefore does not partake of society, is either a beast or a god. " (Aristotle)

Opposition to "wage-slavery" as in the JG is appropriate to beasts or gods who each live on their own asteroid. Nobody else. Not people who live in societies. For them, it is either slavery - one master who orders everyone around or what you are calling wage-slavery. Which is better called people cooperating, the division of labor for the common good. You work and get paid, and use your pay to order somebody else around. From his perspective, it's the reverse. That's how it works, with or without money, it is just one hand washing the other, that is all.

Not having a JG is insane because one party is both demanding something from the other and refusing it, preventing him from giving it, at the same time. One hand thinks he is too clean, too good to wash the other, or be washed by the other, but still wants to be cleaned. Eliminating what is belittled as wage slavery is eliminating human cooperation and human society, or eliminating logic.

So the goal is not to eliminate wage-slavery from society, but to have more of it, under the control of every "wage-slave" = every human being. It is a social imperative, a source of human freedom and dignity, not an obstacle to it.

Noah Way said...

@Tom - Oliver Stone's Untold History of the United States covers the 1944 Democratic Convention and blatant ouster of Wallace by the party. They knew Rossevelt's health was failing and jammed their stooge into the veep slot.

Calgacus said...

Noah Way - yeah, but the first decision was FDR's, to not keep Wallace on the ticket. The most ardent critics of this decision, a concession to party bosses, were FDR's own family. Tough to say at this distance whether FDR was politically right although of course I think he was wrong and doubt the wisdom of it.

Andrew Anderson said...

Not having a JG is insane ... Calgacus

No it isn't since before the means of production were stolen, being self-employed (e.g. family farms and businesses) was the norm. That in no way prevented trade and the division of labor.

The goal then should be justice and justice requires the return of stolen property or equivalent compensation if that is not feasible*.

*E.g. Rather than attempt to break up a large company, its common stock can be equally distributed to all citizens.

Tom Hickey said...

Truman was responsible for setting up the CIA and laying the groundwork for the US deep state on his watch.

He later said it was a mistake and if he had realized the consequences he never would have done it.

This was one of the biggest blunders in the history of the known universe.

Would Wallace have? We'll never know now.

Calgacus said...

Andrew - Like most, you focus on side issues more relevant to beasts or gods, not human beings, obsess about possessions, land, physical property. Whatever, who cares, it isn't important. Have it in common, or let everybody have a robot army on their own asteroid. But have a society and focus on the individual PEOPLE and how they are treated in a society.

Just start talking about society and not side issues for a minute and go to the two guys on a desert island case so beloved by economists. Your ideas are inchoate and insanely unjust if they forestall a job guarantee in a monetary economy. Who elected you (or anybody else who thinks they have the right to disemploy any member of society) der Fuhrer? Do that, and they have every moral right to rob you, take away, your, Arthur Anderson's means of production, family farm and business - because you just did it to them. Your ignorance that you just did it to them is no excuse.

Think about how it works in a family or a village. Does it ever happen that somebody's offer to work is refused? No. In ancient gift economies, which deep down all economies still are, refusing the offer of a gift is a deadly insult. That makes perfect sense - it is saying you ain't part of this here society. But that is what not having a job guarantee means, refusing the (scarce, valuable) gift offer of would be workers. Such gift refusal obviously prevents "trade and the division of labor". This was universal knowledge in the Neo & Paleo-lithic and in most societies since then, until modern times. But we moderns are adept at not seeing what is in front of our nose: division of labor, trade in goods and services, any economic activity, can't happen without movement, without somebody giving something to somebody else.