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

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

Bill Mitchell — A basic income guarantee is a neo-liberal strategy for serfdom without the work

A reader pointed out the other day that a good idea remains a good idea even if bad people advocate it. This was in relation to my blog – Why are CEOs now supporting basic income guarantees?. It reprised an issue that has a long history in culture and the arts. Should we hate Wagner because it was symbolic for the Nazis? What about the work of Budd Schulberg who produced the screenplay for ‘On the Waterfront’ but was simultaneously dobbing people into the House Un-American Activities Committee? There are countless examples of this sort of quandary, or not, depending on your viewpoint. As I wrote in the earlier blog (cited abive), I am always suspicious when the elites advocate something. It is not just a taste for Wagner they are articulating. Generally, they are advocating further pathways that they can shore up their control and power. Which means bad things for the rest of us! The BIG is one of those pathways and it leads to impoverishment and an on-going capitalist domination. A basic income guarantee is not a path to nirvana – I see it as just a neo-liberal strategy for serfdom without the work....

Ccapitalism is not as much about private ownership of the means of production as it is about favoring capital, that is, ownership of real and financial assets, over the other factors of production — labor, that is, workers, and land, that is, the environment.

Capitalism is about capital accumulation and this occurs through expropriation and exploitation of workers and the environment by means of the application of power and control.

In democratic republics, the people have the opportunity to confront this through the electoral process. But they have to know what the alternatives are and how to proceed. Presently, they are being kept in the dark and misled.

MMT shows what some of the economic options are and how they would work to produce an economic system in which the factors of production are integrated harmoniously, with the top priority being people and the planet.

I know that BIG-toting progressives will respond and say their intent is different to Friedman’s. Sure enough. But structures are structures.

The BIG is very susceptible to neo-liberal manipulation. Once you abandon the narrative that it is the government’s responsibility to ensure full employment and agree that all the government is required to do is guarantee a bare existence then the slippery slope has been erected.

A moment’s reflection tells us that the CEOs and their lobbying organisations typically oppose any form of social assistance being provided by governments, in the same way, they tend to oppose wage rises.

Capital-labour conflict remains a central dynamic in our societies and only naivety would lead one to conclude it will go away, or rather, be ‘outside’ this dynamic by giving the unemployed a bare minimum BIG.

Once those who were formerly workers – in direct opposition to capital – become meagre consumption units, then the balance of power is tilted further towards capital....

Bill Mitchell – billy blog
A basic income guarantee is a neo-liberal strategy for serfdom without the work
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Bill Mitchell — Why are CEOs now supporting basic income guarantees?

Must read on the basic income guarantee and why it sucks.

Recall that Marx wrote in his 1844 work A Contribution to the Critique of Hegel’s Philosophy of Right. that “Die Religion ist der Seufzer der bedrängten Kreatur, das Gemüth einer herzlosen Welt, wie sie der Geist geistloser Zustände ist. Sie ist das Opium des Volks” (Religion is the sigh of the oppressed creature, the heart of a heartless world, just as it is the spirit of a spiritless situation. It is the opium of the people).

Religion was a major vehicle for social control used by capital to divert attention away from what they were up to – suppressing wages and worker autonomy and advancing their own interests.

Think about the role the Roman Catholic church played in Latin America as stark examples of the more subtle processes that operate in more advanced nations.
As the hold of religion lessened over time, capital found mass consumption as the next effective way to sustain a docile, compliant working class.

Please read my blog – The mass consumption era and the rise of neo-liberalism – for more discussion on this point.

But that meant allowing the standard of living of workers to increase through real wages growth in line with productivity growth and a more equitable distribution of national income.

As neo-liberalism has become more refined (not in quality but in its ability to attack the living standards of workers), the mass consumption strategy has become more involved.

Capital worked out that it could suppress real wages through labour market deregulation, take the gap generated by productivity growth for itself (redistribute national income in favour of profits), and then maintain mass consumption by pushing massive debt onto households, via the relaxing of credit standards and the corruption of banking, allowed for by the simultaneous deregulation of the financial markets.

Neat.

Major lobbying was expended to make this seemingly perfect solution operational.
Except greed got in the way and the GFC came along because the debt that was being pushed onto households was no longer subject to satisfactory prudential standards and the NINJAs finally couldn’t pay.

At that point, a new form of social control was needed to cope with the mass unemployment that has been created around the world.

Enter the next ‘you-beaut-plan’ – the CEO-advocated BIG.

And the progressives who are pushing for the BIG don’t know what day it is!
So our conception of humanity is of a bare minimum consumption unit – where society only has a responsibility to provide a small capacity to ensure this consumption is enabled.
End of story. We keep people in their boxes with just enough food and other things to keep them alive – just so they don’t rebel and challenge the capacity of the top-end-of-town to go on their merry way pillaging national resources and generated income.

Social control – BIG time.

If they want a better material existence then they can do a bit of work! But haven’t the robots taken all the jobs?...

Bill Mitchell – billy blog
Why are CEOs now supporting basic income guarantees?
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

Neil Wilson — Is Basic Income Basically Finnished?

When is a Basic Income, not a Basic Income? When it’s a Basic Income Experiment.

Modern Money Matters
Is Basic Income Basically Finnished?
Neil Wilson

Kate McFarland — US: eBay founder’s firm to donate up to $493,000 to basic income pilot

Omidyar Network, a “philanthropic investment firm” created by eBay founded Pierre Omidyar, announced on February 7 that it will donate up to $493,000 to the New York based charity organization GiveDirectly. The funds will be used to support GiveDirectly’s major basic income experiment in Kenya.

In the largest and longest-running basic income trial to date, GiveDirectly will provide unconditional cash transfers to the residents of 200 villages in rural Kenya (about 26,000 people in total). The residents of 40 of these villages (about 6,000 people) will receive monthly payments for 12 years. At about $0.75 per day, the amount of the basic income is roughly half of the average income in rural Kenya....

Bien
US: eBay founder’s firm to donate up to $493,000 to basic income pilot
Kate McFarland

Bill Mitchell — Cash transfers are not squandered on booze but do not replace the need for jobs

Some years ago I was asked to design a framework for the implementation of minimum wage system in South Africa as part of an ILO project my research group was involved. We were evaluating the first five years of the Expanded Public Works Programme in South Africa, which was a cut-down employment guarantee program (limited by supply-side constraints on public expenditure largely conditioned by the bullying of the South African government by the IMF). One of the issues I had to deal with was the belief among many economists that the existing cash transfer system introduced by the South African government after 1994 should be expanded into a full-blown Basic Income Guarantee and that any notion of employment guarantees should be rejected. Our work demonstrated quite clearly (in my view) the flawed logic in this argument. The cash transfer system was productive as it stood but was no reasonably extensible into a widespread income guarantee without significant negative consequences. The creation of an employment guarantee scheme to absorb the social transfers and leave them as supplemental to cope with varying family structures was a much better option. That conclusion holds for less developed nations and advanced nations alike....

Bill Mitchell – billy blog
Cash transfers are not squandered on booze but do not replace the need for jobs
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Neil Wilson — Is Basic Income Basically Theft?

The Basic Income idea has some great marketing behind it and superficially appears to solve problems. Unfortunately the tricks used to promote it come straight out of the propaganda textbooks — attributing miracles to the policy when there are not justified.

The main trick is to compare an income guarantee to the broken system we have at the moment. The result is a miraculous increase in output. But that has nothing to do with the merits of Basic Income. It is just what would happen with any system of increased spending activity that knocks our monetary production systems out of the persistent slumps they always finds themselves in under ‘laissez faire’ conditions.

It’s only when you compare Basic Income with other managed economy schemes that the issues with it come to light….

Modern Money Matters
Is Basic Income Basically Theft?
Neil Wilson

Yves Smith — Job Guarantee Versus Basic Income Guarantee

Yves here. I’ve been remiss in not putting this video from November on a discussion of the merits of proposals for a job guarantee versus an income guarantee. The talk was hosted by Dissent Magazine, Jacobin, and the New Economy Coalition, and is explicitly anticapitalist, so you may need to filter out the occasional ideological leap.

The participants were Alyssa Battisoni from Jacobin, activist Jesse Myerson, Darrick Hamilton of the New School, and Pavlina Tcherneva of University of Missouri, Kansas City.…. [Pavlina is now assistant professor of Economics at Bard College.]

Naked Capitalism
Job Guarantee Versus Basic Income Guarantee
Yves Smith

Christine Emba — Universal basic income: A primer

Getting legs?

The Washington Post (September 28, 2015)
Universal basic income: A primer
Christine Emba

Rajesh Makwana — From Basic Income to Social Dividends

It’s time to broaden the debate on how to fund a universal basic income by including options for sharing resource rents, which is a model that can be applied internationally to reform unjust economic systems, reduce extreme poverty and protect the global commons.

Some interesting points but bogs down over affordability. Doesn't get that the issue is distribution of real resources and that affordability is not the issue.

Counterpunch
From Basic Income to Social Dividends
Rajesh Makwana

Yves Smith — The Failure of a Past Basic Income Guarantee, the Speenhamland System

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

Gar Alperovitz— A guaranteed income for veterans

Around the world today there is a growing discourse about a guaranteed annual income, but the idea is hardly new. The concept of a basic income — whether as an unconditional payment or a guarantee that would top off whatever is earned to a level adequate to meet basic human needs — has enjoyed surprising support from both ends of the political spectrum. The free-market evangelists Friedrich Hayek and Milton Friedman both endorsed it, as did Martin Luther King Jr. and liberal economist John Kenneth Galbraith. In 1976, Hayek wrote, “There is no reason why in a free society government should not assure to all protection against severe deprivation in the form of an assured minimum income.”

In his final book, “Where Do We Go From Here: Chaos or Community?” King wrote that “the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.” Galbraith argued in the mid-1960s that we can easily afford an income floor and pointed out that this was “not so much more than we will spend during the next fiscal year to restore freedom, democracy and religious liberty, as these are defined by the experts, in Vietnam.” 

Seeing veterans struggle to keep themselves and their families housed and fed in the wealthiest country in the history of the world is a tragic reminder of our failure of will and of compassion.

Veterans are an obvious place to begin for other reasons as well: The veterans’ pension already guarantees a modest minimum income to returning servicemen and servicewomen unable to work because of disability or age. To qualify, a veteran must have served on active duty (including at least one day during wartime), be older than 65 or disabled and have an income of less than approximately $13,000 (for a single veteran without dependents). The road to a guaranteed income would begin by revamping this system. Simply removing the age and disability requirements from the existing pension system could guarantee a minimum income that would bring all the veterans of recent wars above the poverty line, at a maximum cost of roughly $5.5 billion a year.…

If some are uncomfortable paying veterans for “doing nothing,” an alternative proposal for a sensible contemporary safety net would be to implement a job guarantee, with unemployed and underemployed veterans paid living wages by a federal government willing to act as an employer of last resort. Cash-strapped municipal governments or local nonprofits could easily find ways to put the labor of hundreds of thousands of otherwise unemployed veterans to use rebuilding America’s communities.

Al Jazzera

A guaranteed income for veterans
Gar Alperovitz | Lionel R. Bauman Professor of Political Economy, University of Maryland

Vivian Belik — A Town Without Poverty?

Canada's only experiment in guaranteed income finally gets reckoning

The Dominion
A Town Without Poverty?

Vivian Belik

h/t Jan Milch

Neil Wilson — The Political Aspects of a Basic Income Guarantee

Brian [Romanchuk] has put up a useful post called Consequences of a Basic Income Guarantee which runs through some of the technical issues of an Income Guarantee for Canada and other countries. 

I'm from the UK, and we've had 'Means Tested' Unemployment Benefit, Housing Benefit, Universal Child Benefit, Universal Pensions and a National Health Service for decades. The history of these benefits show why general income schemes just don't work properly in practice.

Let's run through some reality.

Neil makes the point that the practical issues surrounding assistance are fundamentally political rather than essentially economic.

I would add that politics is about power, who wields it and how it is used. In a democracy, the power structure determines candidate selection, while election is by popular vote. So there is a dynamic between the power structure and the mindset of the public. Obviously, it is in the interest of the power structure to influence the public mindset, for example, through popular media controlled by the power structure.

In a capitalist economy and liberal democracy, oligarchic democracy is the norm owing to the ability of the power structure to influence the public mindset through media as well as to select candidates through funding. It is very difficult to change this in a representative democracy with a constitutional government that favors the power structure, legitimating capitalism as the priority of capital (class cronyism) over the other factors, labor (people) and land (the environment).

Without a change in the public mindset little lasting progress can be achieved to reverse these priorities, and without reversing them, little lasting social, political and economic change can come about through the political process.

Marxists hold that the way forward is material, though changing the economic infrastructure, which can only be accomplished effectively through revolution. Therefore, the task is eliminating "false consciousness" by raising the consciousness of labor through re-education in order to effect a political revolution.

Humanists hold that the way is through raising the level of collective consciousness to expand appreciation of universality, thereby grounding political revolution in an expansive conception of human rights.

Both stand in opposition to the classical liberal and neoliberal assumption that the dominant rights, if not the only ones, are self-ownership and ownership of property, both of which are held to be alienable.

3spoken
The Political Aspects of a Basic Income Guarantee
Neil Wilson

Dylan Matthews — Basic income: the world's simplest plan to end poverty, explained

In recent months, discussion of basic income proposals have become fairly mainstream, but not so mainstream that most people know what the phrase "basic income" means. With that in mind, here are the basics (get it?) of the idea, in eleven questions.…

There are a number of different names this idea has gone by over the years. "Universal basic income" and "basic income guarantee" are used frequently. "Guaranteed minimum income" and "negative income tax" are generally used to refer to versions of the plan that also impose a tax that gradually eats up the cash transfer, as a means of reducing the cost of the policy. "Demogrant" was popular in the '70s, and "citizens' dividend" and "social wage" get used from time to time.

VOX
Basic income: the world's simplest plan to end poverty, explainedDylan Matthews

The Pragmatic Libertarian Case for a Basic Income Guarantee

Cato Institute
The Pragmatic Libertarian Case for a Basic Income Guarantee
Matt Zwolinski | Associate Professor of Philosophy at the University of San Diego, co-director of USD’s Institute for Law and Philosophy and founder of the Bleeding Heart Libertarians blog


The Next New Deal
The Pragmatic Libertarian Case for a Basic Income Doesn't Add UpMike Konczal
(h/t Brad Delong)


Noahpinion
Basic Income is good because it's basic
Noah Smith | Assistant Professor of Finance, Stony Brook University

The Job Guarantee: Delivering the benefits that Basic Income only promises
Pavlina R. Tcherneva | Assistant Professor, Bard College

Filip Spagnoli — Let’s Get Rid of Wage Labor

Post-capitalism.

Actually, as Daniel Ellerman addresses this in Does Classical Liberalism Imply Democracy? If life, liberty, and the pursuit of happiness are inalienable rights, ruling out selling oneself in to slavery, for example, how is it not a violation of an inalienable right to sell one's a portion of one's life for a wage since this is an alienation of one's liberty?

In other words, what the inalienable rights of life, liberty and pursuit of happiness means legally is that these are not property, which is a right that is alienable in that the right to exclusive or partial use of property can be exchanged, thereby alienating (excluding) the original owner from use and conferring exclusive or partial use to another through transfer of ownership.

Spagnoli's post may seem far-fetched but read in terms of Ellerman, who is a proponent of social democracy, it makes a lot more sense. No surprise there, since Ellerman is one of the smartest guys around. If you haven't yet read that article, I strongly suggest doing so as a counter to neoliberalism.

Incidentally, the irony of the phrase. "inalienable right to life, liberty, and the pursuit of happiness," as a partial enumeration of human rights, and which are also asserted as divinely endowed, is the hypocrisy of its author, a slave holder.

P.A.P.-BLOG // HUMAN RIGHTS ETC.
Let’s Get Rid of Wage Labor
Filip Spagnoli

(h/t Mark Thoma at Economist's View)