This is a brief response to Warren Mosler’s contribution to a dialogue with Joe Firestone, who has put together an excellent multi-part series that can be read by following the link provided. In this post, I am addressing only the section on the Job or Income Guarantee. Mosler makes the claim that the value of the currency is determined “at the margin”, and from this takes what I consider to be a leap to the conclusion that a BIG as part of the JIG would likely cause a collapse in the currency and hyperinflation.
I don’t see any need to respond in depth, because by coincidence I have already addressed this argument in a recent post and in a few comments. My view is that the conception of the value of the currency being formed “at the margin” is incorrect:
That post was written prior to the dialogue between Joe Firestone and Warren Mosler. However, I have since added a few brief comments in response to Joe in the thread that follows it.
The main comment is reproduced below:
Regarding Mosler’s response:
So if you can get a living wage from the issuer for doing nothing, there is nothing that can stop the currency from being worth nothing once it heads in that direction from an accelerating flight to BIG.
By the same logic, we would have hyperinflation already. An accelerating flight to unemployment benefits.
Most people seem to desire much more than just a basic income and/or derive satisfaction from their jobs. To receive more than the basic income or retain their source of satisfaction, they need to resist the urge to take accelerating flight to the unemployment benefit. And they do resist. They fly in droves in the other direction.
Incidentally, there are traces of marginalism in this argument as well: the “marginal disutility” of work, etc. There is a mistaken belief that what happens at the margin is somehow determinative of the aggregate. In this case, some jobs are unpleasant and at current pay few would wish to do them rather than accept a basic income. Therefore, everyone would quit their jobs if a basic income guarantee was introduced. But, of course, it doesn’t mean that at all. It just means that pay and conditions for those particular unpleasant jobs would need to rise or instead be done with more mechanized production processes.
The remainder of Mosler’s remarks reflect ideological preferences. I see little point discussing ideological differences, if any, in this post.