Wednesday, July 21, 2021

The Basic Income Illusion — NeilW

Basic income is a monetary illusion. Here’s how the trick is done and why it always fails....

Why the JG is superior to a BI. Basically, a JG increases productivity, offsetting resource use, whereas a BI does not. It's a matter of contribution to the economy — give and take — versus take only.

Neil also makes the important point that rights entail corresponding responsibilities and emphasis on rights alone is a perversion of liberalism. 

New Wayland
The Basic Income Illusion


Peter Pan said...

The Great Reset may be an illusion, since it leans toward a UBI type scheme. said...

JG superiority will only be as good as its commitment to an expanded definition of work to include socially useful activities that are now unpaid.

NeilW said...

"JG superiority will only be as good as its commitment to an expanded definition of work to include socially useful activities that are now unpaid."

That view unfortunately misses one of the reasons the Job Guarantee exists. It is a reflection of what the people in society do the production wish to see you doing in exchange for your share - as reflected in the JG wage.

It's not a top down system. It's a peer-to-peer system.

On top of that the main macro benefit is to maintain the unemployed demonstrably "job ready", which provides a better substitute than the current unemployed buffer. It's getting that in place that allows us to run an economy hotter than we do at present - by eliminating the hysteresis effect.

Ralph Musgrave said...

In view of our environment destroying levels of consumption, I don’t greatly object to people sitting around doing nothing in exchange for a very low income gratis the taxpayer. Also there are two bits of evidence that basic income does not reduce the incentive to find a job:

NeilW said...

And there is one big piece of information that it will.

It's called "The State Pension", and most people on it don't work. We have lots and lots of data on that, as well as the impact of the removal of the Default Retirement Age.

The experiments inform nothing because they are small scale and locked into surround areas without the income on a fixed exchange rate. So they can just export their unemployment outside the income guarantee area.

The effect across a currency area will be the same inversion as between a currency user and a currency issuer - because you run out of places to export your unemployment to. Eventually you have to take it on the chin.

Footsoldier said...

"You often read about how basic income will free people to take up education opportunities, learn new skills or pursue other activities."

Nailed it....

Every arguement for the basic income in Scotland used this arguement. I've sat in a 100 of these meetings and that's what they say. Especially, give time to members of the liberal middle class to enter local politics and groups and do some good for their communities.

Oh how I laughed.

I used to stand up in these meetings and simply ask - what good are you going to do because you don't understand how the monetary system works. You think your partner with the high paying job that allows you to do a little bit of charity work instead of sitting in your house bored to death. Pays for the schools and hospitals everyone uses.

You are wrong and will not do any good at all. All you will spend your time doing is reinforcing neoliberal globalist myths that will hurt everyone in the community. In short you want paid for spreading false propaganda, for telling lies. Best thing you can do is learn how the monetary system works first or stay at home and take a hobby.

You should have seen their faces. I didn't care the liberal middle class are the problem. It is long overdue that they were told so.

Footsoldier said...

Listen to the liberals very closely in your communities and what a basic income means to them. It is 50/50

Want to become Bob Ross and paint.


Want to become a Tony Blair.

To save them from having a sexual affair with the postman as they are bored to death with their lives because their partners are the big wage earner.

Peter Pan said...

Sorry, but the owners of the global economy don't need your labour. Be grateful they're willing to give you a stipend for simply existing.

kyunkyun said...

I don’t think the contrast between BI and JG is proper.
I think it is not JG that should be compared with BI, but social security proposed by MMTer.

Pavlina Tcherneva says:
“The JG is a missing piece of the welfare safety net, an add-on, not a replacement.”

Then does MMTer propose universal old-age pension, uiversal health care, etc.? How do they affect inflation?
Below is the reference article on inflation.

“What Do Modern Monetary Theorists Think About Inflation?”

Tom Hickey said...

There is no contradiction between a BI and JG for MMT, as long as the BI is not universal, which MMT argues would be inflationary. There are “BIs” in place in various states as welfare transfers, for instance. Most MMT economists would keep these as a type of “social security” and add to them where deficient. The difference is that MMT economists would argue that this should be funded directly by the currency issuer rather than by the states, which are currency users.

Price stability (and instability) is a function of effective demand (notional demand + spending power) and availability of real resources to meet demand. Social democracy and a welfare state would likely require a managed economy to ensure that supply is sufficient for increased demand resulting from increased fiscal injection.

For example, universal healthcare would require increasing medical personnel, equipment, supplies, and facilities to meet the increased demand as millions of previously uninsured would be added to the user base. This would require public investment in medical education and training, as well as other real resources. Poverty eradication would present similar challenges in that field. Same with free university education.

As long as real resources are sufficient and government purchases of them are managed so as not compete with the private sector in a way that drives up prices, affordability is not an issue for the currency issuer, nor is price stability a matter of concern. At the same time, it is must be recognized that if welfare is generally secure in terms of healthcare, education, basic income and pension, then the need to save will be reduced, which could result in more propensity to spend.

This requires a good understanding of the local, regional, and national economies and the global economy as well as components of the world system. It’s obviously more complicated than can be summarized here.

Tom Hickey said...

My comment above is based on macroeconomics, but macro is a subset of political economy, as I suggested in the final remark on systems, so the analysis must be extended to be practical.

Economies are embedded in societies that are governed politically. The politics also needs to be considered, and politics is heavily influenced by demographics.

Branco Milanovic, formerly of the World Bank and an expert on global inequality, has suggested that it will be difficult politically to move from the present state of capitalism toward social democracy for demographic and political reasons that he discusses in the following.

Branko Milanovic, Will social democracy return? A review of Offer and Söderberg "The Nobel Factor"(Nov 18)

There is no way of knowing in advance whether he will turn out to be correct, but his arguments suggest that without "new thinking" on a mass scale, a return to social democracy likely won't happen easily in a world that is firmly in the grip of capitalism. But, of course, over time everything changes. Moreover, Milanovic's analysis may be flawed. But I think his argument needs to be considered to round out the MMT approach to social welfare, e.g., true full employment and universal social benefits.

A lot will depend on how capitalism is able to handle emerging challenges, including increasing inequality and its consequences. I don't see that being successful enough to avoid impending crises.