Bill Mitchell — UBI–the hopeful not the surrender

I have long disagreed with Guy Standing about the solutions to unemployment. 20 years ago we crossed paths on panels and in the literature where he would argue that UBI was the way forward and I would argue that it was a neoliberal plot and that, instead, we needed to push for job creation. My view has always been that to surrender to the neoliberals on their claim that governments cannot generate sufficient jobs to satisfy the desires for work of the unemployed was a slippery slope. Standing continues to publish his fiction. In his latest Social Europe article (January 15, 2020) – Building a progressive alliance in Britain – he seeks to integrate UBI proposals with a recovery plan for British Labour. My view is that would not help Labour recover from the shots they fired into their own feet in the period before the December election by listening to the likes of Standing and those who advocated the Fiscal Credibility Rule and the reneging on the Brexit commitment. Standing’s aversion to job creation is in contradistinction with a recommendation from the Wetenschappelijke Raad Voor Het Regeringsbeleid (WRR or in English, The Netherlands Scientific Council for Government Policy) to the Dutch government to deal with the challenges of achieving “good work”, in part, by introducing a ‘basic job’ which in my parlance means by introducing a Job Guarantee. They are motivated by a deep vein of social science and medical research that extols the virtues of work beyond its obvious income generation qualities. Pushing a UBI in the light of that research is just a pitiful bailout...

Bill Mitchell – billy blog
UBI – the hopeful not the surrender
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Universal Basic Income–Combined With What Else? — Timothy Taylor

The major problem with a UBI is that it is a shotgun approach that is not addressed to a specific socio-economic need and it is insufficient to meet all socio-economic needs. The other issue is, cui bono? That is, for whose good? And how does that actually work? What happens if it is inflationary, as some economists have warned? If it is indexed, it becomes more inflationary. If it is not, the good it was supposed to do is undone.

Sounds good until you go to the spreadsheet.

Conversable Economist
Universal Basic Income--Combined With What Else?
Timothy Taylor | Managing editor of the Journal of Economic Perspectives, based at Macalester College in St. Paul, Minnesota

Bill Mitchell — The Job Guarantee misinformation campaign – UBI style

Apparently the British Left is “fizzing with ideas for a smarter economy” according to the UK Guardian article (May 12, 2019) – The zeitgeist has shifted. Now the left is fizzing with ideas for a smarter economy – written by Will Hutton. I can’t say I sensed an outbreak of fizz. But in the colloquial language from where I come from, the term fizzer means “Something that promised excitement but instead was a disappointment”, Yes, Hutton’s fizzers include promoting the insights of a long-standing (pun intended) critic of employment guarantees, who prefers people to be propped up as consumption units by a UBI, and, yes, surely, if Hutton is involved, reversing the “tragedy” of the democratic choice the British people made to exit the EU. Apparently, “Remain” is the “great progressive social force of the moment” and if Britain was to leave the EU it would “stand in the way of any of it ever being implemented”, where “it” refers to all these ‘left’ fizzers. It is hard getting one’s head around this logic. A restoration of democracy and sovereignty apparently disables the elected government from using its currency-issuing capacity to deliver a progressive program aimed at advancing well-being. But, staying in a corporatist cabal which has embodied neoliberalism in the core legal structure of its existence and allows corporations to sue governments which threaten their profits and is unaccountable to the people is the exemplar of progression. This stuff is in the world of the pixies!...

Bill Mitchell – billy blog
The Job Guarantee misinformation campaign – UBI style
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia^

Peter May — Counter-cyclical Job Guarantee or Universal Basic Income as An Economic Stabliser?

Whilst I agree, could politicians not be persuaded that, rather than a largely useless National Citizen’s Service, we could have a instead have a ‘Job Guarantee’ or perhaps better sold as a ‘Guaranteed Job Opportunity’ for everyone of school leaving age. Of course many will be going to university but some might like to take advantage of some work experience before arriving in full time education.

Indeed with effort and thought perhaps a Job Opportunity could also be guaranteed to graduates, who would no longer feel the need, necessarily, to be baristas and barmen whilst looking for something else.

All this would, I’d suggest, appeal to those worried by the work ethic as well as to Job Guarantee advocates, when the appallingly harsh system of current ‘welfare’ sanctions is, as they will be eventually, abolished. The Job Guarantee could thus gain credibility and be less influenced by any state ‘useless job’ scenario.

In general though I am still of the conclusion that the psychological – or in current parlance, the mental health benefits of a Universal Basic Income, are a clincher. In fact, it seems to me that a Job Guarantee is, in many ways, reinforcement for a basic right wing agenda of prosperity through hard work, which, in reality, is by no means a guarantee of any such thing.

I therefore come increasingly to the conclusion that a Job Guarantee should be a youth employment opportunity guarantee, largely as a young person’s introduction to wider society.

I agree with Peter May that "guaranteed job opportunity" is more suitable terminology than "job guarantee." The emphasis needs to be on opportunities rather than jobs. Would you prefer an opportunity or a job?

In the first place, "guaranteed job opportunity" is more precise and more exact than "job guarantee." Secondly, it avoids the stigma of "make work," as May notes.

However, the post makes clear that Peter May doesn't fully understand the MMT position on the JG in terms of the macro theory, or the relationship of a guaranteed job opportunity, a universal basic income), and a guaranteed basic income.

First, and most importantly, the guaranteed paid work opportunity at a "living wage" (compensation package) replaces the present buffer stock of unemployed with a buffer stock of employed, which more economically efficient in that it doesn't idle real resources that are available, and it also delivers a substantial cost saving. Moreover, the wage functions as a price anchor for price stability.

Secondly, a universal basic income is inflationary. It also violates the principle of targeted government spending, being universal. The spending should be based on need and also targeted toward spending rather than saving if it is to maintain effective demand at full employment.

Thirdly, a guaranteed basic income establishes a floor above the poverty level for everyone in the society. This also serves to stabilize effective demand at full employment. There is no incompatibility between a guaranteed job opportunity and a guaranteed basic income. They address different problems, issues, opportunities, and challenges. They are potentially complementary rather than being mutually exclusive.

Inflationary pressure when the economy is at full employment and full capacity, and imports are not creating a sufficient buffer against price level  increase, should be addressed by using functional finance, that is fiscal policy, including the tax rate.

The macroeconomic theory of MMT explains this approach to policy formulation based on economic efficiency through employment of available resources.

What about environmental stability? That is a matter of policy that will have to be addressed based on conditions. MMT doesn't dictate how to employ real resources. It simply shows the policy space available to do so.

Previously, the work day was unlimited, then limited to about 12 hours and now it is generally eight hours in the US. With increased productivity due to technology, more leisure becomes available. The concept of "work" is a fluid one socio-economically, and emergent conditions suggest that it now needs to be revisited.

Leisure could be increased and consumption resulting therefrom can be redirected toward achieving and maintaining sustainability rather than wasted through manufactured consumption, giving "consumer society" new meaning.

Progressives need to think in terms of systems and causes, rather than addressing symptoms ad hoc.

Progressive Pulse
Counter-cyclical Job Guarantee or Universal Basic Income as An Economic Stabliser?

Peter May

Peter Cooper — Fairness and a ‘Job or Income Guarantee’

Of the various criticisms leveled at a combined ‘job or income guarantee‘, ones appealing to fairness usually go along the lines that it would be unfair for healthy individuals outside the workforce to receive an income while others are occupied in jobs. In considering this objection, a number of points come to mind:

heteconomist
Fairness and a ‘Job or Income Guarantee’
Peter Cooper

Laura Tyson and Lenny Mendonca — Universal Basic Income or Universal Living Wage?

Asking the right question.

The challenge for the future of work is not really about the quantity of jobs, but their quality, and whether they pay enough to provide a decent standard of living. In the US, ensuring that they do starts with raising the minimum wage and ensuring that other existing tools don't go unused.

Pavlina needs to get in contact with Laura and set her straight.

Similarly, proposals in the United States for a federal jobs guarantee have been gaining momentum on the traditional left. But while such a program could employ millions of workers to deliver basic public services and rebuild and modernize the country’s dilapidated infrastructure, it is no more feasible than a UBI, given current federal budget constraints.

BTW, government spending is now going full blast, deficit and debt be damned. What constraint?

But this is correct.

The challenge for the future of work is not really about the quantity of jobs, but their quality, and whether they will pay enough to provide a decent standard of living.

Workers don't want "bullshit jobs" (ht David Graeber). They want good jobs.

Overall, it's a good article.

Project Syndicate
Universal Basic Income or Universal Living Wage?
Laura Tyson, Interim Dean, Distinguished Professor of the Graduate School
Faculty Director, Institute for Business & Social Impact, Haas Business and Public Policy Group at the University of California, Berkeley, and former chair of the US President's Council of Economic Advisers Group; and Lenny Mendonca, Chairman of New America, ands Senior Partner Emeritus at McKinsey & Company

Bill Mitchell — The plaintive, I just want to do my art!

Bill excoriates the UBI.

Bill Mitchell – billy blog
The plaintive, I just want to do my art!
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Bill Mitchell — UBI advocates ignore the dynamic efficiencies of full employment

I have written about the concept of dynamic efficiency before. The most recent blog post on this theme was – The ‘truth sandwich’ and the impacts of neoliberalism (June 19, 2018) – which examined how social mobility across generations has been declining as a result of the decades of entrenched unemployment driven by neoliberal austerity biases. I also outlined the proposition in this blog post – US labour market reality debunks mainstream view about structural impediments (January 15, 2018). The point of all this is that establishing high pressure labour markets brings about more than just workers who want to work having jobs. It brings other major benefits that workers can enjoy and forces firms and governments to manage their affairs differently from when there is entrenched unemployment. The UBI proponents never really understand that point as they continue to surrender to the proposition that mass unemployment is inevitable and all the governments should do is keep people alive with some guaranteed income. All these dynamic efficiency gains are then not realised and capital has the run of the field....

Getting into the nitty gritty.

Framing the debate in terms of UBI or JG, presuming that the choice is binary, involves confusing categories. They are different programs addressing different issues, and they are not mutually exclusive as a binary division of single bounded set "workers," having only two subsets that exclude each other.

This is largely due to failure to appreciate fully the JG position, and as a result mounting attacks on a straw man. Since this position has been set forth amply in the literature, such behavior is unprofessional.

Bill Mitchell – billy blog
UBI advocates ignore the dynamic efficiencies of full employment
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

See also

Jeremy Corbyn’s speech this morning raises a big question in economics that won’t get the attention it deserves: is there a trade-off between static and dynamic efficiency?

Stumbling and Mumbling
Corbyn's neglected question
Chris Dillow | Investors Chronicle

See also

The issue of UBI and JG is not only economic but runs the gamut of the social, political and economic spectrum, influencing all aspects of society.

In the new millennium, the proliferation of financial assets, with unstable economic growth, has given way to widespread to precarious jobs, income gaps and weaker welfare programs. The same policies that have obliterated social services and kept labour cheap have supported the expansion of short-termism and new global business models in the context of deregulated capitalism.

Besides, the onset of the 21st century represents a new political age overwhelmed by the violation of democratic ideals of political equality and social peace. Indeed, democracy has been allowing for election to office but not to power (Madi, 2015). And, as a consequence, policy makers might give priority to their sponsors instead of the needs of citizens – decent work and income equality.

In truth, the current trends in global capital accumulation and production have shaped a scenario where unemployment, job instability and fragile conditions of social protection increased (Stiglitz, 2011). First, labour-saving technologies have reduced the demand for many middle-class, blue-collar jobs. Second, globalization has created a global marketplace, confronting expensive unskilled workers with cheap unskilled workers overseas and favouring outsourcing practices. Third, social changes have also played a role in the labor market changes, such as the decline of unions. Four, political decisions are influenced by the top 1% who favor policies that increase income inequality.
All these trends do reveal issues of current power, politics and economics in a social context where democratic institutions are being threatened....

Very short review of Robert Kuttner, Can Democracy Survive Global Capitalism?, WW Norton, 2018

WEA Pedagogy Blog

On global capitalism and the survival of democracy
Maria Alejandra Madi

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

Bill Mitchell – Basic income guarantee progressives cosy up with the worst CEOs in the world

A short blog post today (Wednesday and all). I am working on the revisions to our Modern Monetary Theory (MMT) textbook that will be published by Macmillan-Palgrave in November 2018. We have all the editorial and external reviews available now and are working through the editorial process to complete the final version. Mostly clarifications and style issues. There will be a slight rearrangement of chapter order and emphasis but nothing major. In the meantime, some thoughts on UBI and some music for today. A more detailed blog post will come along tomorrow....

Bill Mitchell – billy blog
Basic income guarantee progressives cosy up with the worst CEOs in the world
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Tyler Prochazka — Professor argues for job guarantee over basic income

Universal Basic Income (UBI) is gaining more traction in mainstream discourse, but the academic debate has been heating up for years. One scholar with a sympathetic but critical eye towards basic income still believes it is not the best priority for activists.

Philip Harvey, a professor of law at Rutgers, wrote that a job guarantee could eliminate poverty for a fraction of the cost of UBI — $1.5 trillion less.
Harvey argued in 2006 that the focus on UBI may be crowding out more realistic policies that could achieve the same ends.

“[Basic Income Guarantee] advocates who argue that a society should provide its members the largest sustainable BIG it can afford – whether or not that guarantee would be large enough to eliminate poverty – are on shaky moral ground if the opportunity cost of providing such a BIG would be the exhaustion of society’s redistributive capacity without eliminating poverty when other foregone social welfare strategies could have been funded at far less cost that would have succeeded in achieving that goal.”

When I interviewed Harvey this month, he said his views have largely stayed the same and he still sees a fundamental difference between the advocates of UBI and job guarantee.

“The most important driver of that difference is the inherent attractiveness of the UBI idea. It really is an idea that captures the imagination and admiration of all kinds of interested parties with different kinds of agendas. The job guarantee idea, on the other hand, attracts people who are more into the weeds of policy analysis.”....

Bien

Professor argues for job guarantee over basic income

Tyler Prochazka

Bruce Lesnick — The Unemployment Conspiracy

JG v. UBI

Counterpunch
The Unemployment Conspiracy
Bruce Lesnick

Nathan Tankus — No, UBI Criticisms Are Not Implicitly Premised On The Idea the Racial Wealth Gap is Good (Sigh)

Nathan Tankus rips up UBI advocate Matt Bruenig and takes a shot or two at Matt Yglesias.

Go JG!

Tankus Notes

No, UBI Criticisms Are Not Implicitly Premised On The Idea the Racial Wealth Gap is Good (Sigh)

Nathan Tankus

BIEN — History of UBI: From Hunter-Gatherers to the 21st Century

Backgrounder. Links to an Investopedia paper.

Seems to reinforce the conclusion that sharing requires a more advanced level of collective consciousness or necessity for social cooperation to survive than exists in most places today.

BIEN
History of UBI: From Hunter-Gatherers to the 21st Century

Benjamin Lascia — The American Enterprise Institute releases a proposal for a universal basic income

The paper’s proposal is a budget-neutral form of a UBI, meaning instead of implementing a basic income in addition to the existing American social welfare system; most existing programs like Medicaid, Veteran’s Benefits, and Social Security for the elderly over 65 are repealed and replaced with a UBI. Using data from the Federal government’s budget outlays from 2014, the paper finds that the repeal of large programs in America would yield about $2.54 trillion dollars. In addition to this, the proposal repeals 23 different tax benefits like the Student Loan interest deduction and Earned Income Tax credit, bringing in more revenue and freeing up a grand total of about $3.21 trillion for a UBI.

With additional taxes coming in from the UBI itself, and increased tax liabilities on all income tax brackets, the proposal finances and prescribes a basic income of $13,788 for individuals over the age of 18 and $6,894, or half the income of adults, for individuals under the age of 18.

Using Federal government tax data, the paper analysis the net benefit gain or loss by tax bracket and age. Using the parameters described, the findings show that some of the most adversely affected by this system are in the lowest tax bracket ($0-$10,000). This is unsurprising, because many of the programs this proposal had repealed to finance the basic income are concentrated on this tax bracket.

Another group adversely affected by this proposal are individuals 65 and older, also because their benefits, such as Social Security, have been repealed and distributed among the rest of the population. When excluding age groups of 65 and older, however, nearly all tax brackets see a net benefit in this proposal, with the brackets seeing the greatest benefits being those in the middle.…

The important findings in this proposal from the American Enterprise Institute show that, if a UBI were to merely replace the existing social welfare system in the United States, by repealing existing welfare programs and tax benefits, there would be an overall redistributive impact from the old to the young, and from the poor to the middle class; though there would be a gain in efficiency overall.

BIEN

UNITED STATES: The American Enterprise Institute releases a proposal for a universal basic income

Benjamin Lascia

Cameron K. Murray — Why does a basic income need to be universal?

Detailed analysis.

Renegade Inc.
Why does a basic income need to be universal?
Cameron Murray

Alex Grey — Universal Basic Income is no magic bullet against poverty, finds OECD

The OECD’s recent report on UBI compares the costs in four OECD countries – Finland, France, Italy and the UK – and concludes that it is no magic bullet for poverty.
For starters, the OECD says that a UBI that lifts people out of poverty will cost much more than countries currently spend on welfare.…

This means that massive increases in taxes – up to 10% of GDP in some countries – as well as a reduction in other benefits, would be needed to fund it.

The report also says that not everyone would benefit. The rich and the poor would gain the least, while people on middle incomes would gain the most. Early retirees also stand to lose out. Those currently on benefits would lose out, says the OECD, especially in countries where existing social protection is comprehensive.

The OECD concludes that, without targeted benefits, or much higher spending, the risk of poverty might actually increase, as people lose their existing benefits in favour of UBI.... 

World Economic Forum
Universal Basic Income is no magic bullet against poverty, finds OECD

Alex Grey

Bill Mitchell — A Basic Income Guarantee does not reduce poverty

… the introduction of a Job Guarantee would eliminate poverty arising from unemployment and the working poor because the Government could condition the minimum wage by where it set the Job Guarantee wage. If it truly desired to end poverty among those in employment then it would set the Job Guarantee accordingly. Others argue that a more direct way of dealing with poverty and lack of income is to just provide the income via a Basic Income Guarantee (BIG). The BIG idea has captured the progressive side of politics and many on the Right. It is another one of those sneaky neo-liberal ideas that look good on the surface but are rotten not far below. Supporters of BIG are really absolving currency-issuing governments of their responsibility to use their fiscal capacities to ensure there are sufficient jobs created – whether in the non-government or government sector. They are thus going along with the neo-liberal attack on the right to work. Moreover, closer analysis reveals that the introduction of the BIG would not, under current institutional arrangements reduce poverty at all....

I think Bill on to an ket point in saying that basic income is neoliberal, based on neoclassical economics including New Keynesianism. This implies that the JG is based on social welfare based on Keynesian economics, including Post Keynesianism and MMT.

The key point is the difference between creating a buffers stock of employed to ensure full employment in the sense of a job offer for everyone willing and able to work, and buffer stock of unemployed that must be supported by transfer payments over one sort or another.

Basic income does not address this key point, and obscures the tradeoffs by emphasizing the benefits while minimizing the costs and externalties. Basic income is like treating a serious wasting disease with an analgesic like aspirin.
 
Bill Mitchell – billy blog
A Basic Income Guarantee does not reduce poverty
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Ben Schiller — Economists Are Not Very Enthusiastic About The Idea Of A Universal Basic Income

These days, all kinds of sensible and brilliant people, from Elon Musk to the prime minister of Finland, are voicing support for universal basic income. The idea of giving everyone—or at least some people—enough to lift them out of poverty without having to work some menial job is very of the moment. Executives like Musk are asked about it all the time, and executives like Musk generally think it's a good call; the tech elite are some of the idea's most enthusiastic supporters.

But among economists—who presumably would need to be on board if a basic income were to become mainstream policy—support is far from universal. They generally see the idea as appealing in theory, but unworkable, expensive, or creating the wrong type of incentives in practice. They worry it will stop people from working, and generally from participating in society. When the IGM Economic Experts Panel—which surveys economists from "the most elite research universities" on policy questions—asked economists about basic income, the response was noticeably negative....

Co.Exist
Economists Are Not Very Enthusiastic About The Idea Of A Universal Basic Income
Ben Schiller

Thomas Piketty — Is our basic income really universal?

After our call « For a credible and bold basic income » launched by a group of ten researchers (Antoine Bozio, Thomas Breda, Julia Cagé, Lucas Chancel, Elise Huillery, Camille Landais, Dominique Méda, Emmanuel Saez, Tancrède Voituriez), we received considerable support and also, of course, questions and requests for clarification. The first question was: Given that the system of a basic income which we propose does not defend the idea of an identical monthly allowance paid to each individual, is it really universal? The question is legitimate and I would like to reply here as clearly as possible....

Thomas Piketty's Blog
Is our basic income really universal?

Thomas Piketty | Professor at EHESS and at the Paris School of Economics

ht Mark Thoma at Economist's View