A JIG May Promote Social Productiveness

One type of objection to the Job or Income Guarantee (JIG) that has been expressed concerns its potential effects on the level of productive activity. In particular, there has been some concern that without a requirement of reciprocity, the JIG would enable some people to obtain an income without doing anything for society in return, and this would be unfair or at least perceived by many as unfair. My view is that the net effect of a JIG would be to promote socially productive activity, and that the extent of true free riding – in the sense of contributing nothing to society – is not likely to be significant.

Some critics of a JIG seem to be focusing almost entirely on the likelihood that, at least initially, some people might opt for the basic income and decide to do nothing at all that is socially productive (if that is possible). In these cases, it may be true to say that the basic income recipients would be producing less of social benefit than those who chose to participate in the voluntary Job Guarantee (JG) program. Even if the JG merely compelled a person to rake leaves rather than watch TV all day, for instance, there would be some small social benefit along with perhaps an appeasement of societal resentment.

But there are also likely to be cases where a compulsion to participate in the JG would prevent a person from doing things of more social benefit. Somebody might be compelled to rake leaves rather than care for family, organize social gatherings, invent, create, perform, volunteer, program freeware, etc. Even in cases where a person initially intended to do nothing productive, this might not last indefinitely if boredom and a desire to be more productive set in.

Part of the motive for suggesting a JIG is that capitalists and governments do not necessarily do a good job of determining socially productive activities. It seems likely that there will be many instances where individuals would be far better placed to identify ways in which they could contribute positively to society. Joe Firestone made this point more clearly than I have in a previous comment:

[T]he problem with this is to define who is contributing and who is not. There are many people who are very well-paid in nominal terms, but not only do not contribute; but contribute negative well-being. This has always been the case; yet if [their] activities are not illegal we allow them to practice those activities and to extract resources from people who [come] under their sway. Apart from these cases, and considering a society which offered private employment, a job guarantee, and also an income guarantee to those who did not want to take the job guarantee; what makes us think that those who were using a formal job guarantee program would be contributing more than others who were using the income guarantee program? We can easily conceive of situations where someone using an income guarantee would produce greater value for society than someone using a job guarantee.

For example, let’s imagine that Germany around the turn of the 19th century had both types of guarantees, and Einstein felt he would be better off practicing physics if he relied on the income guarantee rather than the job guarantee, and that, in fact, there was no job guarantee role he could have occupied that would have provided as much time to do physics as the income guarantee. In a situation like that, having hindsight, of course, would we be prepared to say that it was better for society to have Einstein take employment as a patent office clerk, or to take a job guarantee as an elder care provider, rather than having him live off the income guarantee, and be free to spend his full time generating the Special Theory of Relativity?

There also seems to be a view with some critics of the JIG that many (most?) people would opt for a guaranteed basic income rather than seek higher incomes in regular employment. Although that would not bother me if true, I find it hard to believe considering the materialism of our time. Given the current state of consciousness, how many people are likely to be satisfied with a basic income when it is possible to earn much more in regular employment?

My guess is mainly two types of people would make this choice:

(i) those who have very limited options when it comes to formal employment and also care little about societal disapproval;

(ii) those who are driven to pursue a particular vocation irrespective of the meager financial reward or societal disapproval.

One way or another people in group (i) need to obtain at least a basic income. Whether this is through a wage labor requirement (JG), a basic income payment or a fringe job in the regular economy, if assessed in narrow monetary terms their productive contribution is likely to be measured as small. It may well be the case that such a person would be more socially productive just being a happier, more financially secure friend and family member.

However, my guess is that this first group is tiny, because people down the lower end of the income scale are probably more sensitive to social prejudice and inhibited by societal expectations than those in higher socioeconomic brackets with more education and/or independence. To the extent people with limited employment options tie their self-image to holding down a job, they will be more likely to opt for the JG. The exceptions are probably mostly those people who have become accustomed to long-term unemployment under the current system, in which case there would be little change in their productive contribution in moving from the current system to a JIG.

People in group (ii) would be enabled by the JIG to make greater contributions than if they were forced to take less meaningful, less socially productive wage or salary employment.

One other aspect I haven’t considered in previous posts is that, currently, there are many people who cannot get as much employment as they would like (i.e. the underemployed). Far from most people wanting less paid employment, they want more. That means there is currently substantial scope for an expansion of output in the regular economy even allowing for the likelihood that under a JIG some people would opt out of the labor force altogether. To the extent the basic income payment added to demand, it would enable an expansion in production in the regular economy. For a given level of resulting demand, the choice by some to opt out of the labor force would leave more employment for those who wanted it.

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7 thoughts on “A JIG May Promote Social Productiveness

  1. “Far from most people wanting less paid employment, they want more. ”

    There are also those that are overworking – either paid or unpaid who will back off onto the better paid, less hours JiG.

    And then capitalists have the incentive to introduce better machines. Low cost slave labour actually inhibits innovation. Getting rid of high cost labour with machines gives a bigger payoff.

  2. Good point, Neil. You’re right. Regarding individual workers’ preferences, it could go either way.

    After posting I also realized that my point in the last paragraph is not necessarily a good thing from the perspective of the academic MMTers. To the extent they want capitalists to be well served by “loose labor markets”, a reduction in involuntary underemployment in the regular economy (as opposed to in JG employment) would be considered a negative by them. I don’t share their aspirations in this respect, but that is another matter.

    I completely agree with your position regarding the benefits of exerting pressure on employers to lift their game in terms of the quality of employment opportunities they provide and applying pressure on firms to introduce new technology and more efficient production methods.

  3. My objections to the BIG thus far have been narrowly focused on potential negative political consequences, not that I don’t love the idea of democratizing how much wage labour we are compelled to deliver. It is is in the same spirit of the popular guaranteed paid vacation found in every mature capitalist economy except the US. This is a social issue we are going to be increasingly forced to address as benefits of automation and trade accrue to the few at the expense of the many in the absence of new systemic solutions.

    So far my objections have been regarding my predictions of the negative fallout from the BIG. It reflects my best guess about what would happen when a pretty vision meets dirty practice. I read an article this morning saying the UK is creating a JG as a Western version of the Gulag where no guards with whips are needed for people to show up for unpaid work. In the US, I predict abuse by free-riders will be a real problem, just like abuses of workman’s comp are a problem and refusals to accept paid work opting remain on the dole are not by any stretch negligible based on my personal observations (I know very unscientific, but I voluntarily joined the blue collar ranks in the US for a couple years not long ago for personal research). The BIG has the potential to inflame race relations and it will be magnified 1000x by Fox News and seized upon by the Tea Party to grow their base. God save this nation if someone like Michelle Bachman becomes president. I don’t believe in one size fits all (nations) policy solutions.

    As far as I know, I’m the first to discover this, here is conservative hero Ronald Reagan, who’s father was employed by the WPA, on the JG:

    “Welfare is another of our major problems. We are a humane and generous people and we accept without reservation our obligation to help the aged, disabled, and those unfortunates who, through no fault of their own, must depend on their fellow man. But we are not going to perpetuate poverty by substituting a permanent dole for a paycheck. There is no humanity or charity in destroying self-reliance, dignity, and self-respect … the very substance of moral fiber.

    We seek reforms that will, wherever possible, change relief check to paycheck. Spencer Williams, Administrator of Health and Welfare, is assessing the amount of work that could be done in public installations by welfare recipients. This is not being done in any punitive sense, but as a beginning step in rehabilitation to give the individual the self-respect that goes with performing a useful service.”

    Indeed conservatives can be very progressive. 🙂 There are other issues with the BIG that I haven’t investigated yet, such as at what point does the BIG become so large that we not materially afford to pay a living wage? There is a large amount of discussion about the BIG on the Levy Institute website, I look forward to reading it, and this blog in the coming days.

  4. Tschäff, interesting thoughts as always. I suspect your reading of the political realities are quite accurate, unfortunately.

    On a side note, I always find it strange when people refer to “welfare dependency” as if dependency is an unusual condition under capitalism. In my opinion, capitalism is almost entirely a system of dependency. Most people are dependent on the owners of the means of production for the opportunity to earn a wage or salary. Very few people are independent in the current system. (It was the Reagan Sr quote that made me think of this.)

  5. PeterC,

    Thanks for the thought provoking series of posts on JIGs! As an engineer type I have long been interested in the question of sci fi style futures and what the logical end point of automation’s effects on society will be.

    The short version of my reaction is that I think the JIG is a fantastic “theoretical” idea but that it will be MANY years in the future (perhaps beyond our lifetime?) before the demand for human labor is low enough for society to deem the JIG *unquestionably* worthwhile. A JIG too soon would be open to continuous political battles, IMHO, whether or not the JIG really was “good” for society.

    The core reason is that a JIG allows individuals to choose to dedicate their time primarily to fulfilling their own needs/wants instead of society’s needs. People opting for the JIG’s income option MIGHT choose to volunteer their time to what they personally consider to be society’s needs, but they may be incapable of astutely judging what others need… or they might just intentionally spend their time on things they know will benefit no one but themselves.

    Here’s how the alternatives serve society’s needs, to a rough approximation:

    1. Private sector spending reflects the demand by citizens for the goods and services that others can produce (no matter how much we might mock the “worthless” — according to us individually — output of particular industries)

    2. Government spending [ideally, and assuming a democracy] reflects the “permanent” spending on public goods and serves that society (via elected officials) deems worthwhile

    3. Job guarantee spending (as proposed under MMT) reflects the community-determined needs of a geographic locality that are on a more flexible timeline and level of need than #2 above.

    In your posts you have made comments such as “Part of the motive for suggesting a JIG is that capitalists and governments do not necessarily do a good job of determining socially productive activities” and “Somebody might be compelled to rake leaves rather than care for family, organize social gatherings, invent, create, perform, volunteer, program freeware, etc.”. I agree with those statements when looked at in isolation, but I’m not sure I agree with them in the context of a far off automated future, because I think in the future it will be much easier for society to pay for those things directly if there is any perceived value in them.

    (And actually wrt the first quote don’t workers decide on what activities should be in GDP via their spending choices to a far larger extent than capitalists and governments??)

    I think the best test for whether the JIG would be a clear “win” for society that no one could argue against [maybe?] would be via these steps:

    1. Set government spending at the level that reflects everything a functional democratic society thinks should be part of the public output

    2. Allow the sovereign currency to float so the trade balance reflects the nation’s current advantages and disadvantages

    3. Reduce taxes to ZERO

    4. Institute a MMT-style job guarantee but require that all jobs created fulfill some collective “good” (yes there is a risk that this job selection process could be corrupted, and all my comments here are overly focused on theory without much acknowledgement of potential inevitability of unintended outcomes!)

    5. Then the critical question — is there still non-trivial involuntary unemployment because localities are no longer able to think of any more JG functions that they think help society? (No, IMO digging holes and filling them in again would not directly help society in this scenario!)

    6. If all those conditions are met, who [in theory] wouldn’t support a JIG?!?
    (I’ll ignore unlikely possibilities like all human-run productive activity shutting down because everyone on the planet chooses the JIG’s income option over remaining in private sector employment at any wage, no matter how high).

    If you create a JIG before going through all six steps above and still finding yourself with unused labor, you are probably judging that some individuals have a right to prioritize “selfish” goals above society’s goals, even if those “selfish” goals might through enlightened self interest be a best effort attempt to do what the individual thinks is good for society.

    Such a JIG might or might not be a net positive to society — my point is that it is not an obvious “win win” situation to all observers until production is so highly automated that you can’t get anyone to spend a marginal dollar of income (no matter how much you cut taxes) such that more jobs for humans will be created.

    Back to your examples, my point is that if people with jobs and incomes can’t think of anything else to spend on rather than accrue “excess” savings (beyond their future planned spending needs such as retirement), wouldn’t they be happy to give money for others to “care for family, organize social gatherings, invent, create, perform, volunteer, program freeware, etc” if those things really are seen as beneficial in some way? If no one will spend their excess savings on these activities (whether through private markets or through charities or even a private sector funded JIG with a review board to assess who to give these incomes to), then is the individual really correct to think that they would be helping society by performing these activities?

    Maybe the individual (especially a pioneer in new thought or practice) IS a better judge of value than any group can be, but then you get into questions of human nature and judgment as individuals versus groups that are beyond my limited knowledge of history and relevant academic literature.

    You sometimes mention a future in which “income was no longer tied to work” — but the problem with that is income is ALWAYS tied to work (downstream in the circular flow even if not upstream) because when income is spent it is a claim on other people’s labor.

    One possibility is a hyper-mechanized world in which the means of subsistence living (food, shelter, clothing) require ZERO labor by other human beings. In that world, what we might really want is not an income guarantee (because that is a claim on the labor of others, and unnecessary) but a “means of subsistence living guarantee” — perhaps everyone gets a chunk of land with micro-scale renewable energy hardware and a share of the local “farm robots” output of food, etc. Thus the baseline human right is a claim on what can sustainably be automated to provide for everyone’s basic needs, but not a claim on the labor of others.

    Maybe the means of production for subsistence living will always require SOME human labor… so there might be programs that would compromise in the middle… e.g., if a quarter of subsistence production requires human labor, give everyone the option for an income at that fractional level, but require them to serve society’s demands via a part time job in private sector, formal government sector, or job guarantee to earn the remainder of what they need for subsistence living. And anyone can of course choose to try to earn more to support a higher consumption lifestyle.

    In the case of a less automated society in which the means of subsistence still require significant human labor… I do understand that a basic income option within a JIG could be set to minimal level relative to the “average” income in the population, and thus society might deem politically that they could “afford” to give everyone this ability to be “free” to pursue their own interests exclusively without starving or freezing to death… But my argument is that then this is probably a continuous hot-button political choice rather than an inevitable evolution beyond capitalism.

  6. PeterC, I agree money and power social relations sometimes hide this fact. Here is how David Graeber puts it:

    “The market is simply one manifestation of this more general principle of mutual aid, of the matching of abilities (supply) and needs (demand) – or to translate it into my earlier terms, it is not only founded on, but is itself an extension of the kind of baseline communism on which any society must ultimately rest.”

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