Maybe We Are Going About This Wrong

In much of Europe there has been high unemployment for a long time, since well before the onset of the present crisis. People are increasingly accustomed to its existence. That means they are also accustomed to a sizable proportion of society receiving an income disconnected from labor time. In many other countries there has been high unemployment at one time or another during the neo-liberal period. In upcoming decades, waves of mechanization are going to make it increasingly unnecessary for people to work full time or for everybody to participate in the labor force. In thinking about a progressive way forward, why try to swim against the tide with a Job Guarantee when the tide brings with it the necessary preconditions for a Basic Income Guarantee?

I know this will seem unrealistic to U.S. readers, but let’s face it, the U.S. is a lost cause in the foreseeable future for any kind of progressive change. The U.S. will muddle through because its government, despite all the rhetoric, understands Keynesian macroeconomics better than most other governments around the world. But the U.S. government will simply ensure that the economy muddles through just well enough to prevent mass support for any kind of significant change, and there is very little support for progressive policies in the U.S. in any case.

For much of the rest of the world, however, where there are stronger traditions of egalitarianism and fraternity, I’m starting to think the Basic Income Guarantee is the approach that makes more sense and is most likely to gain widespread support, especially among the young. Maybe this is not the case in some English-speaking countries, but I suspect it is true at least of Europe.

If a Job Guarantee of the kind the Modern Monetary Theorists envisaged in which all kinds of activity, even leisure activities, were included under the umbrella of socially productive activities, and pay was minimum wage plus benefits, sure, that would be a terrific outcome. But it seems obvious to me that this is far from what would be implemented. We would get work for the dole or other forms of workfare. This would be a backward step from what we have now.

Strategically, if a Basic Income Guarantee were first introduced, it would still be possible to push for a Job Guarantee on the basis that anyone who wanted employment in the formal economy should be entitled to it, and the policy would be less vulnerable to attack from reactionary elements in society because of the existence of the Basic Income Guarantee.

I still favor the Job or Income Guarantee (JIG) in the medium term, because I think anyone who wants to compete for a share of whatever formal employment remains as mechanization progressively takes over production should be entitled to a fair shot at it. If there are going to be higher paying occupations, then as long as they remain there should be equal and open opportunity for people attempting to obtain them.

However, I think the order of conquest from the perspective of activism needs to be reversed. The Basic Income Guarantee actually strikes me as a more realistic political goal in Europe than a Job Guarantee, and if it was established in Europe its chances of spreading to other countries would increase. Once introduced, the risks associated with pushing for a Job Guarantee would be reduced.

I understand this is likely to be an unpopular post, but I don’t see the point of writing this blog if I don’t write what I really think. I acknowledge the strength of the Modern Monetary Theorists arguments in relation to inflation and the human costs of unemployment, but I don’t want to support something that seems highly likely to be turned into workfare by political enemies and result in a backward step in terms of broader social development.

I also think that a Basic Income Guarantee is viable, and even if inflation control would not be as tight as under the Job Guarantee, my honest reaction is, in the grander scheme of things, “so what?”

28 thoughts on “Maybe We Are Going About This Wrong

  1. “The Basic Income Guarantee actually strikes me as a more realistic political goal in Europe than a Job Guarantee”

    I’m not sure about that. The BiG breaks the work=income paradigm pretty comprehensively.

    Certainly in the UK the Universal Credit structure is not that far away from the Job Guarantee. All it needs is a government that understands that fiscal restrictions are a ridiculous concept. (And we’re not likely to get that in the next ten years unfortunately) and then some solid modelling on whether subsidising the private sector is systemically sensible or a moral hazard.

    From a UK perspective I reckon selling the idea of paying people just to do stuff – particularly if that stuff was in the Third Sector – would sell easier than a general income guarantee. ‘Paying the feckless’ is a big hurdle to get over here.

    (And by this I mean that there are two tiers on the income – with ‘jobs’ paying more than ‘unemployment insurance’, rather than it being flat rate as I understand a BiG would be.)

    The Daily Mail headline today was ranting about paying people ‘on the sick’ who’d gone abroad thanks to Eu rules. I was impressed that they’d managed to get all their bogeymen into one article. Unfortunately the DM represents the attitudes of the UK swing voter.

    Mainland Europe may be different, but they have the Euro hurdle to deal with first.

  2. I couldn’t help but to think of Brooks article today in the NYT (“Where are the Liberals”) while reading your post.

    “Why don’t Americans trust their government? It’s not because they dislike individual programs like Medicare. It’s more likely because they think the whole system is rigged. Or to put it in the economists’ language, they believe the government has been captured by rent-seekers”

    One of the difficulty of selling a Job Guarantee Program is the perception of creating another big bloated government program.

    http://www.nytimes.com/2012/01/10/opinion/brooks-where-are-the-liberals.html

  3. The “deserving poor” bigotry seems to be a specialty of some Anglophone countries. I know bigotry is alive and well in my country. I try to avoid it by never straying more than a kilometer or two from the CBD. 🙂

    Mainland Europe may be different, but they have the Euro hurdle to deal with first.

    That’s true, although I wonder if the authorities there risk pushing things to a point where it will bring people to demand real change. I get the impression that in the U.S. the government understands it can just keep things pottering along in a way that is conducive to undermining general living standards without aggravating mass opposition. Plus, Americans seem to be the population where people have most internalized establishment interests as their own. Maybe it is different in Europe. (?)

  4. In upcoming decades, waves of mechanization are going to make it increasingly unnecessary for people to work full time or for everybody to participate in the labor force.

    Peter, is is this something we can be sure about? We have had industrialization and mechanization going on for some time now, and while it is true that for some segments of the workforce work hours have been reduced, are we really as a society devoting significantly less time to work? Can we be so sure that people will eventually choose to fill the time made available by increased productivity with substantially increased leisure? Or will they choose to aim for new forms of labor intensive progress?

    Also, we have benefited for over a century and a half from the relative “free lunch” of usable energy stored up in a very finite supply of petroleum deposited in the earth from millions of years of biological decay and geological forces. Is it obvious that as that resource runs out we will be able to replace it with something that stores and transforms usable energy so efficiently? What if we have to fall back on less efficient, and more labor intensive forms of energy extraction just to maintain something approximating our existing standard of living?

    Whatever overall level of leisure we choose for our way of life, there will always be work to be done, and an egalitarian social system is one in which that work burden and the fruits of that work are shared equitably. That contrasts with the libertarian model in which everyone owes virtually no obligation to society and is free to choose how much they do or do not participate in society, and in turn their society owes nothing to them.

    It seems to me that the fraternity of European social democracies has become strained of late, and some of those societies have reverted to more classically capitalist, neoliberal forms of organization as resentments have built up between the population that is working and the population that isn’t. And here in the US, preserving the distinction in the lower income segments of our society between those who are working and those who are not is one of the great demagogic tricks of the plutocracy for building up class resentments among the less affluent to distract them from the problem of the plutocracy.

  5. Dan, good points. I strongly agree that there is nothing at all inevitable about society opting for more free time as it becomes feasible (I do think it will become feasible).

    Part of my thinking is that the neo-liberal era, by generating mass unemployment and underemployment, may actually have been helpful in this respect, in terms of people reassessing their priorities, and maybe drawing on this can be helpful in making a transition to more free time in the future.

  6. Dollar Monopoly: Good link, thanks. I obviously hope my pessimism is misplaced. It’s hard for me to know what the situation is as an outsider. My impressions are partly influenced by the thoughts of American MMTers on what they consider realistic. (By the way, I am pessimistic about my own country, too. It seems to me that we are the country most keen to follow the political path of the U.S., just twenty years behind.)

  7. I don’t think that the issue is the JG, or even anything to do with economics. The issues are cultural and institutional, and the economics just follows the prevailing norms that define the worldview of the collective mindset of a society. In the US we have an overarching society, the US, and fifty sub-societies, the sovereign states, all of which have their own governments that formulate, execute and adjudicate state law, which is often not the same for all states. Then, there are the urban, suburban, es-urban, rural, and outlaw areas (yes, we even have outlaw areas). Then try to mix this together into a coherent collective consciousness. Obviously, it cannot be done, and often the divisiveness is stark, sometime becoming violent. In many of these locales, people are well armed.

    The cultural and institutional issues are ideological. These issues find expression intellectually (“philosophically”) and at the volitional-affective level of norms (“morally” and ethically). This is the “ethos” of the society or group, and of course, in has its microfoundations in the mindset of individuals.

    A lot of what we are talking about now involves ethos rather than economics. The fundamental principles and normative aspect of economics, especially as it relates to policy choices, is connected with the ethos of a society and its sub-groups. The dominant economics will reflect the ethos of the dominant group.

    MMT is “heterodox” since it does not reflect the mindset of the socially dominant group.

    There are two characteristic relationships involved with dominance. Dominance-submissiveness, and dominance-challenge. In my view, advocates of a JG are choosing to submit to the dominant group out of expediency. In contrast, protestors like Occupy are challenging the dominant group. I guess you know where I stand on this.

    There are several issues involved that are elephants in the room at present. The first is the challenge of climate change, which is bringing home the warnings of those emphasizing limits to grown, whereas the present economics is based on infinitely unlimited growth, which as Soddy pointed out years ago is impossible. The second follows from that since humanity has to deal with its carbon footprint to survive as a species, the present course being unsustainable. This has not yet dawned on the collective mindset in a way that has provoked the level of change that is required in the time frame required to avert deep doo-doo.

    A JG addresses none of this, so in my book it is a failure out of the gate.

    What is needed is a recognition that two things are necessary. First, the collective mindset has to shift to take unfolding realities into account, or else. The present course is unsustainable for humanity. Secondly, the collective mindset has to shift away from cultural and institutional structures that perpetuate an obsolete way of thinking, judging, and behaving that leading to an unsustainable future.

    From this two things follow. First, the shift in collective mindset has to create new cultural and institutional structures suitable for the challenges that humanity faces as consciousness and therefore human life globalizes. We can see where we are headed if we look and right now it is over the cliff. It needn’t be that way.

    Secondly, even though physical resources are limited, humanity does have an unlimited resources, which Bucky Fuller called “metaphysical,” that is, consciousness. There are not limits on human knowledge and creativity in dealing with design problem. The chief issue we face in Fuller’s terminology as an architect-philosopher is a design problem. The present design is obsolete and breaking down under pressure, and we need a new design suitable for quickly unfolding conditions that are pressing on us.

    We really have thought this through as a species yet, although there is a lot of good heterodox thinking that has been going on for some time. But there are powerful forces whose goal it is to preserve the status quo that favors their interest. This is why I say that dominance-submissiveness is not appropriate at the juncture but rather a challenge must be addressed to the dominant paradigm. This really is a “revolution” in Kuhn’s sense.

    MMT is part of the paradigm, I believe, since money is a primary institution and one of the great inventions of humankind, comparable to the wheel in engineering. We just need to apply it creatively to present challenges. Financial sustainability is a lot more than rescuing the present system with a fix but leaving it substantially the same, going its unsustainable way.

  8. Dan Kervick,from what I read of the experts (I’m not personally well acquainted with the science) I think that if humanity doesn’t resolve the energy issue through technological innovation that allows massive reduction in the carbon footprint pretty quickly, we are toast as a species. The numbers are in, and it doesn’t look pretty.

    Secondly, do the progression of population growth. Unsustainable in just a few decades. If we continue on the present course, there will be trillions of people on this planet and that, of course, is not possible. So we either figure out how to migrate a significant part of that elsewhere, or nature will take care of this. Admittedly this is the long view and will not happen in our lifetimes, but the effects of climate change will be the primary issue that occupies those having born in the 21st century. That’s kids and grandkids of people reading this.

    It is just crazy to keep hurtling along in a direction that is unsustainable and becoming more dangerous by the minute in pursuit of more profit instead of more leisure. Moreover, the consumption is not distributed. A disproportionate number are being served disproportionately by the rest. It makes no sense. We are fouling the only nest we have, for what exactly?

  9. peterc: Plus, Americans seem to be the population where people have most internalized establishment interests as their own.

    This is part and parcel of the American mythos that shapes the national ethos. “Rugged individualism” the “open frontier” and the “pioneering spirit.” This a reason that Ayn Rand’s superficial “philosophy” and third-rate novels are so popular.

    Conventional US history is a sham as Howard Zinn has shown, and the American dream” is a nightmare as Noam Chomsky has documented. There is not only no left in the US, but there is also no active intelligentsia with a publicly recognized role. There’s an apropos saying now that Newt Gingrich is running as GOP candidate: “Newt is a guy that dumb people think is smart.” That applies to most US “public intellectuals” who pander for money and jockey for status.

    On the other hand, there is a huge underground in the US where people just disregard the prevailing culture and create their own cultures. This is still possible, although the surveillance state is calling that increasingly into question. If there were repression of the various undergrounds, then there would be revolt of one sort or another. Anyone paying attention to the mindset of the Tea Party and Occupy knows that revolution is still part of the American mythos, too.

  10. Dan Kervick,from what I read of the experts (I’m not personally well acquainted with the science) I think that if humanity doesn’t resolve the energy issue through technological innovation that allows massive reduction in the carbon footprint pretty quickly, we are toast as a species.

    Tom, that might be true. But one possibility is that we will solve the carbon footprint problem, and the problem of the inherently limited amount of petroleum, through kinds of innovation that are never able to deliver the same energy bang for the amount of labor involved that is delivered by petroleum. In that case we will have to choose between either a diminished material standard of living or more work. I’m not saying this is the only possible resolution, or even the most likely one. But it’s a possibility we have to consider. Petroleum is one of the greatest gifts nature ever gave us; but once we began to exploit it in earnest we began to use it up fairly quickly. What if there is simply no replacement?

  11. Tom: Awesome comments, particularly your 5:57 PM. I completely agree with your point about human creativity and consciousness being unlimited. That is what excites me most about our potential. You have brought up numerous fascinating points I need to read much more about. Any recommendations for reading material? Thanks for the great insights.

  12. Dan you said

    is is this something we can be sure about? We have had industrialization and mechanization going on for some time now

    The only thing that was likely to stop the inevitable was “Peak Oil” – but with the latest news, that has been bypassed – and by a large margin – the Pons Fleischmann water heater is now a reality.

  13. See also –What to make of Andrea Rossi’s apparent cold fusion success

    The apparent success of Andrea Rossi’s E-Cat cold fusion demonstration on 28 October is starting to send ripples into the mainstream press. So what new clues do we have to settle whether it’s the breakthrough of the century or the scam of the decade?

    In the demonstration, overseen by engineers and technicians from Rossi’s mysterious US customer, the device appeared to produce over 470 kilowatts of heat for several hours. The customer was evidently satisfied and paid for the device, though other scientists and journalists attending were not given close access to the test equipment.

    Following his first sale, Rossi now says he has orders for thirteen more megawatt-class E-Cat power plants. He’s offering them to anyone at $2,000 (£1,250) a kilowatt, which works out at $2 million (£1.25 million) per unit, and says he has customers in the US and Europe. Rossi says a domestic version rated at a few kilowatts is at least a year away. He is also working on adapting the E-Cat so its heat output can converted to electricity, but this will require higher working temperatures and will take two years or more.

  14. Peterc, this was the collective mindset of the Sixties and Seventies countercultural protestors and it found expression in the thinkers of the time. Abraham Maslow challenged the dominance of Skinner’s Behaviorism (rat psychology) and overturned it with Humanistic Psychology, which later morphed into Transpersonal Psychology with Maslow’s participation.

    Maharishi Mahesh Yogi brought not only Eastern thought to the fore but provided a simple and universally applicable meditation technique for accessing more expanded states of awareness, obviating the reliance on drug that turned out to be deleterious in quantity. 😮

    R. Buckminster Fuller provided the visionary science and engineering approach to environmental transformation through design science. Economist Kenneth Boulding, a co-founder of General Systems Theory along with Ludwig von Bertalanffy, introduced psychic capital to economics (similar to Fuller’s metaphysical wealth) and popularized Evolutionary Economics. Gregory Bateson was an anthropologist, evolutionary thinker, systems thinker who developed an epistemological approach he call ed “meta-science.”

    Also very important were the revolutionary thinkers that expressed themselves through their music that inspired a generation and continue to inspire other generations, like John Lennon.

    Williams Irwin Thompson founded the Lindisfarne Association in in 1973, around the time that Esalen Institutue in Bur Sur was founded. Lindisfarne’s fourfold goals are:
    1. The Planetization of the Esoteric
    2. The realization of the inner harmony of all the great universal religions and the spiritual traditions of the tribal peoples of the world.
    3. The fostering of a new and healthier balance between nature and culture through the research and development of appropriate technologies, architectural settlements and compassionate economies for meta-industrial villages and convivial cities.
    4. The illumination of the spiritual foundations of political governance through scholarship and artistic communications that foster a global ecology of consciousness beyond the present ideological systems of warring industrial nation-states, outraged traditional societies, and ravaged lands and seas.

    One of the chief esoteric works at the time was probably Serving Humanity by Djwal Khu, channeled by former Theosophist Alice Bailey.

    This was also the time of “the Eastern invasion.” Maharishi Mahesh Yogi brought not only Eastern thought to the fore but provided a simple and universally applicable meditation technique for accessing more expanded states of awareness, obviating the reliance on drug that turned out to be deleterious in quantity, eventually surpassing Timothy Leary and Richard Alpert in popularity. Alpert later became Ram Dass, a New Age spiritual icon who popularized Eastern thought among youth.

    While Meher Baba was less well known, in my view his contribution was the greatest. I especially recommend reading his short discourse, The New Humanity, which I have previously mentioned.

    All of these influence were coordinated and disseminated through the Whole Earth Catalogue, edited by Stewart Brand. This was the internet of its day, along with alternative newspapers, called “the free press.”

    There were a lot more inputs but this hits some of the highlights. I was deeply involved in this at the time as a grad student, and I wrote an MA thesis called “Evolution or Revolution: Toward a Philosophy of Social Change” as a vehicle for exploration.

    These are the shoulders to stand on, but this is “old thinking” now in the digital age. Remarkably, we did not have computers then, and even long distance calling was very expensive. How times have changed.

    This era has to develop its own spirit of the time (Zeitgeist), which, of course, is underway, and this is one of the venues. Zeitgeisthas picked up the ball and run with this, and TED is the new Whole Earth Catalogue. Facebook, Twitter, Skype, YouTube, etc. are the new free communications media.

  15. Laura,

    I have reason to think that it is real. The reaction that he has gone for Ni->Cu is workable, based on the work of one of de Broglie’s students, based on Maxwell’s work.

    It also meshes in neatly with things that I have seen and observed.

  16. I have reason to think that it is real. The reaction that he has gone for Ni->Cu is workable, based on the work of one of de Broglie’s students, based on Maxwell’s work.

    Game changer if it pans out and is scalable. Humanity jumps into new territory as a species, comparable to the harnessing of fire in prehistorical times.

  17. @ Tom

    Tom, I checked out TZM from your link. Some interesting stuff, but maybe you can make some inroads there? They linked to a Zero Hedge article about the National Debt surpassing 15 trillion under the category “Collapse Watch.”

  18. Sounds like it needs an open source distributive movement then CA

    Always the option of being labeled a T’ist if the PTB decide not to allow it though.

  19. I was thinking of pursuing something similar (might still do it) once my current project pans out (2008 really hurt! And delayed my timetable!)

  20. @ dave

    TZM seems to be very influential as are some other emerging venues, movement, and portals aiming to be holistic and avant-garde. But generally their economic concepts are bonkers. Amazingly the Sixties and Seventies economic thinking was light-years ahead, dealing with a lot of the issues that still remain submerged.

    MMT has a lot to contribute but a lot to learn from those out of the box thinkers, too. I suspect that at least some of the MMT economists have read them, though.

    But if MMT is going to capture the minds and hearts of the young it is going to have to be a lot more forward thinking and expansive that it is now. It comes across as more old thinking, and that’s to me, and I am old now!

  21. And to Peter I’m sympathetic to your goals but as I’ve previously stated on this very issue, my view is the inverse. JG first then BIG with a BIG lower than a JG for basically all the reasons others like Dan, Neil and Pilkington have said (I think that’s who they were anyway).

    Once we’re past those incremental steps on we go, but as you can no doubt see the JG is a tough political sell.

  22. Fair enough, Senexx.

    Regarding the JG paying more than the BIG component, in my first post on the JIG I wrote:

    I’ll call it a JIG (because I’m silly). Under this arrangement, a person could choose for themselves if they wanted to engage in wage labor or have more free time to pursue their own vocation or leisure. It would be possible for the voluntary job guarantee to pay more than the basic income guarantee if that was deemed appropriate through the democratic process, but for simplicity I will just assume they pay the same as it doesn’t really affect the argument. (emphasis added)

    Personally, my ideal is for everybody to receive the same and be free to do what they want. But I suppose there might be a few incremental steps in getting there. 🙂

  23. The way I see it the JG could be a govt contribution in excess of the BIG by providing access to more real resources but the sage compensation package. The JG work doesn’t have to be leaf raking and should not be. One could have the option of leisure to use as one chooses or to join a govt program that provides resources that one would otherwise not have access to and be paid to gaining this access instead of paying. Some of the WPA and CCC “work” was actually creative play that produce output useful to society, like art and entertainment. I don’t think that the JG is being looked at creatively enough, but rather moralistically on the part of many.

    But as came out over at Cullen’s in a discussion between us, the JG really comes down to a price anchor provided by tethering nominal price (wage for unskilled labor) to real value (hour of unskilled labor). This commodifies labor and labor is not properly conceived as a commodity in the opinion of those who value human rights and dignity. It’s a compromise with the status quo at best and a step backward at worst, depending on how it is implemented, and with the current collective mindset a worse case solution would be more probable than a better case one.

    Where I agree with Cullen is that the arbiter should be quality of life rather than quantity measured in impersonal data, in which human beings are not differentiated from things. Where we disagree is over distributional effects and what the measure of quality should be, as well as the underlying incentives that drive the economic process institutionally.

  24. Tom, I basically agree with each point you’ve made.

    I would say, though, that if the JG was so broad that it included providing access to resources for leisure, as I think it should, then to this extent it would be doing little to preserve the wage labor relation. People participating in these activities would not really be staying “job ready” for capitalist employers, and so it would not be functional for capitalists in the same way as more narrowly defined JG activities. This lack of functionality would be a good thing, in my opinion, and might help to undermine the capitalist class over time.

    Or perhaps you mean that the government would pay the private sector for access to the leisure resources? I would be opposed to that. By the Kalecki equation, this would just be funneling profit to capitalists. I’d rather the resources were provided in the public sector.

  25. I like this discussion very much and Tom contributes his own very original perspective to great effect. I’m still of the opinion that Peter’s JIG idea is very powerful. It gets around the Calvinism to some degree, but also provides employment for those who want to make more and who also need to work, because they derive their sense of worth from a formal job.

    I think the JIG is also good because it provides a transition to the possible future of much greater productivity than we have now and the ability to drastically cut the standard work week. Or liberate some people from formal work obligations entirely.

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