Steve Randy Waldman — The political economy of a universal basic income

Debate is hotting up. SRW disagrees with Max Sawicky and agrees with Ed Dolan.

I think that UBI — defined precisely as a periodic transfers of identical fixed dollar amounts to all citizens of the polity — is by far the most probable and politically achievable among policies that might effectively address problems of inequality, socioeconomic fragmentation, and economic stagnation. It is not uniquely good policy. If trust in government competence and probity was stronger than it is in today’s America, there are other policies I can imagine that might be as good or better. But trust in government competence and probity is not strong, and if I am honest, I think the mistrust is merited. 

UBI is the least “statist”, most neoliberal means possible of addressing socioeconomic fragmentation. It distributes only abstract purchasing power; it cedes all regulation of real resources to individuals and markets. It deprives the state even of power to make decisions about to whom purchasing power should be transferred — reflective, again, of a neoliberal mistrust of the state — insisting on a dumb, simple, facially fair rule.…

Like the excellent Ed Dolan, I favor a basic income large enough to matter but not sufficient for most people to live comfortably. The right way to understand a basic income as a matter of economics, and to frame it as a matter of politics, is this: A basic income serves to increase the ability of workers to negotiate higher wages and better working conditions. Market labor is always “optional” in a sense, but the option to refuse or quit a job is extremely costly for many people. A basic income would reduce that cost. People whose “BATNA” is starvation negotiate labor contracts from a very weak position. With a basic income somewhere between $500 and $1000 per month, it becomes possible for many workers to hold off on bad deals in order to search or haggle for a better ones. The primary economic function of a basic income in the near term would not be to replace work, but to increase the bargaining power of low income workers as a class. A basic income is the neoliberal alternative to unionization — inferior in some respects (workers remain atomized), superior in others (individuals have more control over the terms that they negotiate) — but much more feasible going forward, in my opinion.Interfluidity

The political economy of a universal basic income
Steve Randy Waldman

Max Sawicky — Does the UBI need work?

Commenters point me to some illuminating work on the UBI by Ed Dolan (‘ED’).

Max Speak
Does the UBI need work?

Max Sawicky

MMT And The Sustainability Of Sovereign Deficits And Debt

This is the fourth part of the series on sovereign deficits and debt. (Last week I erred in identifying the post as the third part in the series on math sustainability—it was the third part of the whole series but only the second piece on math sustainability; in a sense, this is the third part of the math series.) The series was started in response to my Economonitor Ed Dolan’s original post detailing agreements and possible disagreements with the MMT approach.

Economonitor | Great Leap Forward
MMT And The Sustainability Of Sovereign Deficits And Debt
L. Randall Wray | Professor of Economics, UMKC

Randy Wray — MMT AND MATH SUSTAINABILITY OF SOVEREIGN DEFICITS (Part 3): Who Sets the Interest Rate?

This is the third part in a series that is responding to a nice post by my fellow Economonitor blogger, Ed Dolan. We’ve been discussing the sustainability of US federal budget deficits and debts. Because we agreed there is no question of “affordability” we’ve moved on to other issues surrounding sustainability. A common method is to look at the “mathematical sustainability” of the debt. Ed and I agree that it comes down to comparing the interest rate on government debt with the assumed growth rate of GDP.

To simplify, if the interest rate is higher than the economy’s growth rate, then the debt ratio rises continuously. OK, that sounds bad. (I think Ed and I disagree over the usefulness of this math exercise, but since so many economists think it is important, I’m addressing it in detail. In a later blog—probably next week—I’ll argue why I think the whole thing is a waste of time.) Let’s look at the determination of interest rates this week.

Economonitor — Great Leap Forward
MMT AND MATH SUSTAINABILITY OF SOVEREIGN DEFICITS (Part 3): Who Sets the Interest Rate?
L. Randall Wray | Professor of Economics, UMKC

Randy Wray — Bond Vigilantes And Math Sustainability Of Fiscal Deficits

(Part 1): Does Sovereign Government Set Its Own Interest Rates?

Last week we began our series exploring where MMT parts company with “Keynesian” macroeconomics. This is a response to Ed Dolan’s useful post here: http://www.economonitor.com/dolanecon/2012/11/28/what-does-it-mean-for-fiscal-policy-to-be-sustainable-mmt-and-other-perspectives/

Economonitor | Great Leap Forward
Bond Vigilantes And Math Sustainability Of Fiscal Deficits
L. Randall Wray | Professor of Economics, UMKC

Ed Dolan — What Does it Mean for Fiscal Policy to be “Sustainable”? MMT and Other Perspectives

I'm a bit tardy putting this up. Here it is, if you haven't seen it yet.

Economonitor | Ed Dolan's Econ Blog
What Does it Mean for Fiscal Policy to be “Sustainable”? MMT and Other Perspectives
Ed Dolan